A significant proportion of pathology tests ordered in hospital are unnecessary. Specific measures targeting the increasing appropriateness of pathology service use have been shown to decrease overall ordering of laboratory tests. However, it is not clear whether general programmes to improve quality of care will have any impact on the use of pathology services. Use of pathology services was compared within two separate prospective controlled clinical trials of re-engineered clinical pathways for both elective (surgical) patients and acute unplanned (medical) admissions. Trial One was a controlled trial of a re-engineered surgical service. Booked patients in the treatment group were admitted on the day of surgery, care was guided by a clinical pathway, and patients were discharged early with domiciliary post-acute care. Controls were admitted on the day before surgery, treated according to usual practice and discharged according to surgeons' preferences. In Trial Two, acute medical patients admitted to hospital through the Emergency Department (ED) were randomised into a treatment (Hospital in the Home) or a control (inpatient) care pathway. In both studies, patients on the re-engineered clinical pathways were well matched demographically and clinically. Health outcomes and satisfaction ratings were comparable. Seventy per cent fewer laboratory tests were ordered in the elective surgery intervention group (P < 0.0001), while the treatment group of the acute medical patients had 25% fewer tests ordered (P = 0.0133). Pooled results also showed a significantly lower rate of test ordering (P < 0.001) for the treatment group (Mann-Whitney U-Wilcoxon ranked sum test). The findings of these audits of controlled, prospective trials suggested overuse of laboratory tests in New South Wales public hospitals, and that savings can be generated by using clinical pathways and applying clinical criteria to the ordering of tests without adversely affecting health outcomes.