When factors that drive hospital laboratory costs are clearly understood, administrators and laboratory directors can make more informed, comprehensive decisions about the laboratory's future. If internal laboratory operations cause higher-than-average relative costs, department managers can work toward improving productivity, efficiency, and decisions about purchased products/services. If, however, external factors, such as unusually high laboratory utilization and service-level expectations of the medical staff cause higher-than-average relative laboratory costs, hospital administration and laboratory managers can determine whether those external factors can be modified to reduce laboratory costs without adversely affecting patient care.