Blood tests are the most commonly used, in diagnosing thyroid disease and hormone imbalance. Occasionally Doctors will use additional tests, including one called an "Uptake Scan", which is a test of thyroid function using radioactive iodine which is given to a patient in small dose, followed by radiological imaging, after the thyroid absorbs/uptakes the iodine. Through this test, the Doctor can determine at what percentage the thyroid is functioning properly. The Uptake Scan test can also detect the presence of thyroid nodules and helps determine the type they are. A “Thyroid Ultrasound” is similar but images are made by means of highly sensitive sound waives and while this test does not determine how well the thyroid is functioning, it can reveal nodules in the gland, goiters and abnormal thyroid tissue.
The more common tests, from blood draw samples, are in groupings called "Thyroid Panels" or each test may be done separately. A thyroid panel, will include what most Doctors agree to be the most diagnostic and sensitive test, called "TSH" (thyroid stimulating hormone). This hormone, being an indicator of thyroid function, does not come from the thyroid gland itself but from a gland in the brain, called the "pituitary". This master brain-gland regulates many of the body’s hormones and TSH is the regulating hormone it sends to the thyroid gland to regulate its production of the actual thyroid hormones, the main/major ones being the "T-3 and T-4" hormones. These are the hormones the thyroid itself puts out for regulation of our body's metabolism, in response to being stimulated by TSH to do so. The T-3 and T-4 hormones are made up of iodine molecules, T-3 having three iodine molecules and T-4 having four iodine molecules.
As described above, the TSH level in the blood and also the thyroid hormones T-3 and T-4 in the blood are the ones that determine how the thyroid is functioning. In the year 2002, the "AACE" (American Association of Clinical Endocrinologists), revised the standard for TSH testing. In other words the "normal range" was changed due to their ongoing research that concluded the old TSH range as being too broad, so they narrowed it, so that more patients with developing thyroid disease, could be diagnosed earlier. The old TSH range was generally "0.5 to 5.0", with the revised range being roughly "0.3 to 3.0" (most labs are still using the older reference range).
When a patient is tested for TSH, they need to have a result from the blood sample that fits in the reference range, to be considered normal. If they have a reading below 0.3, this would possibly indicate hyper-functioning (hyperthyroidism/Grave's Disease) of the thyroid gland because this means the pituitary is backing-off from sending more TSH because it senses too much thyroid hormone already being released by the thyroid gland. On the other hand, if a patient's blood result is above 3.0, this possibly indicates hypo-functioning of the thyroid gland (hypothyroidism).
The T-4 and T-3 blood tests come in a variety of different versions, such as the "totals" of each or the "free" levels of each, or are combined in tests called the "FTI Index" and the "T-7". There is also one called the "T-3 Uptake". All of these help determine thyroid hormone production levels and all of them have lab ranges with a "below-normal" indicating hypothyroidism and an "above-normal" indicating hyperthyroidism.
Many Doctors believe the "TSH", and the "Free T-3 & T-4" are the three best blood tests for thyroid function. Abnormal readings on any of these, would also likely result in a Doctor ordering tests for "thyroid antibodies" (killer cells from the immune system), to determine if the thyroid dysfunction is due to autoimmune disease of the thyroid gland (most common cause).
Look for the article entitled; "Basics about Thyroid Disease Treatments", in the "Related Links" area below.

