How AI Can Restore Patient-Centered Diagnostics

Laboratory benefit managers (LBMs) were ostensibly designed to control healthcare costs, but like pharmacy benefit managers (PBMs), they've evolved into profit-extraction mechanisms that help payors line their pockets at the expense of providers and patients. While reports show LBMs reduce lab spending, they fail to measure the massive downstream costs of delayed diagnosis, missed diagnosis, and administrative burden they create.

The irony is stark: lab spending represents less than 3% of overall healthcare expenditure, yet laboratory tests inform 70% of key medical decisions. LBMs are essentially robbing Peter to pay Paul—optimizing the wrong variable while extracting profit from healthcare inefficiency.

The False Economy of Traditional LBMs

LBMs have created business models that profit from complexity, delays, and administrative burden. While genetic and specialized tests face formal prior authorization requirements, routine diagnostics encounter "softer" barriers through documentation requirements and network restrictions that achieve the same discouraging effect.

The Hidden Costs:

• Delayed Diagnosis: Documentation requirements and network limitations delay even routine tests like cardiac enzymes, potentially turning a $50 test delay into a $100,000+ heart attack intervention
• Administrative Extraction: Physicians spend up to 14 hours weekly on administrative tasks, with LBM-related paperwork representing significant overhead designed to generate revenue for intermediaries
• Provider Burnout: Utilization management processes, documentation requirements, and prior authorization create dependency on LBM "management" services while providers struggle with cash flow delays

The Personalization Problem

Healthcare post-ACA has moved toward standardization at the expense of proactive, data-driven personalized care. No two people are the same, yet LBMs apply one-size-fits-all restrictions that actively work against individualized diagnostic approaches—particularly in precision medicine where genetic testing and specialized diagnostics face the highest barriers.

AI-Powered LBM: From Blocking to Supporting

Artificial intelligence can transform lab benefit management from a system designed to block providers into one that supports clinical excellence. By integrating clinical decision support (CDS) into LBMs powered by AI, providers can receive diagnostic interpretation support that guides them to understand results and make clinical decisions efficiently.

Current LBMs profit by shifting administrative costs to providers to dissuade them from challenging LBM decisions. This system has been broken by rent seekers looking to profit short-term while knowingly increasing long-term costs - the fundamental business model of health plans and their intermediary partners.

AI-Powered Solutions Provide:

• Real-time clinical decision support for optimal test selection
• Diagnostic interpretation guidance to accelerate clinical decision-making
• Elimination of profit-motivated administrative friction
• Aligned incentives where success correlates with patient outcomes
• Population health insights that enable proactive care

Adia Health: A New Model

At Adia Health, we're partnering with value-based care providers, particularly fully capitated medical groups, to manage laboratory ordering differently. Unlike traditional LBMs, we don't profit by limiting lab ordering - we manage the value of total laboratory spend. We're aligned with providers and patients to close diagnosis gaps and ensure timely treatment.

In our model, providers understand their population risk, and earlier diagnosis leads to better medical loss ratios for risk-bearing entities. Rather than creating barriers, our AI-powered platform enhances decision-making by providing real-time clinical support, diagnostic interpretation, and population health patterns that enable proactive care.

Enhancing the Shift to Value-Based Care

The shift from fee-for-service to value-based care is transforming U.S. healthcare. Adia-powered LBM supports this transition by ensuring lab tests contribute to better health outcomes and cost efficiency. By aligning with VBC goals—improved care quality, reduced costs, and enhanced patient experiences—we play a crucial role in modernizing healthcare delivery.

The Path Forward

The future of lab benefit management lies in eliminating extractive intermediary models. Laboratory tests are too important for patient care to be subject to profit-extraction schemes that benefit intermediaries at the expense of clinical outcomes.

Healthcare organizations that embrace AI-powered lab benefit management will deliver superior patient care through faster diagnosis, elimination of administrative barriers, and true alignment between diagnostic investment and patient benefit.

The technology exists today to restore the direct relationship between diagnostic testing and patient care. The question is whether healthcare leaders will embrace solutions that align incentives with patient outcomes or continue tolerating intermediaries that profit from healthcare inefficiency.

At Adia, we're proving that healthcare intermediaries can add genuine clinical value rather than extracting profit through complexity - exactly as it should be in a patient-centered healthcare system.