Laboratory testing services are presently undergoing dynamic changes in response to a wide range of external factors. Government regulations, reimbursement, and managed care are only a few of the influences affecting the availability of testing services and on-site testing capabilities in hospital, independent, and physician office laboratories. Medical practice changes, marketplace influences, test technologies, and costs also play a role in determining where testing is being performed. To better understand the factors influencing clinical laboratory test volumes and menus and to identify on-site testing deemed essential in physician office laboratories, we gathered information from a network of clinical laboratories in the Pacific Northwest. Questionnaires were sent to 257 Laboratory Medicine Sentinel Monitoring Network participants in March 1996. In the past 2 years, changes in on-site test volumes and test menus have been primarily due to medical practice changes and marketplace influences. When laboratories had a decrease in test volumes or test menu choices, the size of the patient workload and the volumes of test orders have had the greatest impact. Laboratory regulations and managed care contracts have played a role in shifting on-site testing to outside sources; however, these factors did not appear to be primary influences. Only 5% of physician office laboratories identified tests that they believed were essential for optimal patient care but did not perform on-site.