Laboratories provide essential services to the health sector on the monitoring and treatment of disease. Routine implementation of new diagnostic techniques may be costly; therefore, understanding their clinical utility, impact, and cost-effectiveness are necessary to guide decisions as to whether and how such techniques should be implemented. In this study, the authors design a conceptual framework for examining the following: (1) optimal mix of laboratory services at different levels of the health system; (2) combination of resources required within laboratories to promote efficiency; and (3) potential for outsourcing to promote cost containment. The framework considers both the health and economic rationale for laboratory investments. The authors then use the conceptual framework to inform a decision analytics model that maps out the health and economic impact of laboratory investments, and to illustrate the model by investigating the best placement of a new technology (GeneXpert) for detecting multi-drug-resistant tuberculosis (MDR-TB). The illustrative application of the model shows that investment in a new diagnostic technology for MDR-TB is cost-effective regardless of placement in a district-level (satellite) or national-level (reference) laboratory. Placement of the GeneXpert system at the satellite laboratory results in patients tested for MDR-TB or TB at lower costs than the reference laboratory. Furthermore, if testing occurs at the satellite laboratory, more primary and secondary cases are treated and cured than if testing was conducted at the reference laboratory, leading to better outcomes. Overall, testing at the satellite laboratory results in more deaths averted and more disability life-adjusted years (DALYs) saved. Both facilities have average costs per DALY well below the World Health Organization (WHO) - suggested threshold for the per capita gross domestic product (GDP). However, the satellite laboratory saves more DALYs at a lower additional cost per DALY.