Challenges of Healthcare Waste Cost Management

Break through the barriers of healthcare cost management to reduce waste expense without jeopardizing quality.

In 25 years of providing waste management services, we’ve been able to identify two simple - yet incredibly difficult to overcome – cost management challenges that every healthcare organization faces. These are not the only challenges to effective waste cost management; however, they are frequently overlooked due to their simplicity, and significantly hinder a hospital’s ability to manage waste costs.

1. Accurately Identifying Waste Costs

How can an organization expect to cut costs if they can’t accurately identify the costs? Waste management within a hospital has both hard and soft costs. The cost for the actual disposal of waste is very transparent; however, there are soft costs, such as labor and facilitation that are tougher to grasp. Understanding all costs associated with the management and disposal of waste requires going well beyond the disposal vendor and onsite support invoices.

In order to properly identify waste costs, hospital management must (figuratively) dive into their waste streams and determine where disposal costs originate. Each time a plastic bottle or aluminum can is put into a RMW bag rather than a recycling receptacle, the hospital is paying unnecessary disposal costs (figure 30 cents per pound for RMW vs. 3 cents per pound for recycling). Improper waste stream management on a large scale is an enormous cost burden for a hospital. Understanding where waste should go, and where it actually goes is extremely important to identifying your costs.

2. Devising a Long-Term Plan

Without conquering barrier number one, you’ll stand very little chance against barrier number two; however, if you can accurately identify waste costs then you’ll have the ability to effectively develop a long-term plan for reducing costs and improving sustainability.

Devising a long-term plan will require definition of total waste cost in terms that everyone within the hospital will understand. Converting waste costs into a common denominator (adjusted patient day, cost per square foot, etc) and providing metrics based on that denominator will allow the organization to develop and execute their long-term waste reduction and cost reduction plan.

Overcoming these two challenges will allow a hospital to develop long-term purchasing strategies, training programs, and engineering controls that promote cost reduction, operational efficiency, and hospital sustainability.

How Not to Reduce Waste Costs

It is a common misconception in waste management that if you send a certain need or project out to bid you’ll receive the best price and ultimately reduce your costs. The idea itself is not flawed since it creates a competitive scenario where vendors shrink their margins as much as possible in order to win the bid; however, hospitals must be careful that their bidding process aims to reduce total waste disposal cost, not just per unit expense. This can be extremely costly if you select a vendor whose organization thrives on feeding their incinerators. With little attention to proper waste stream allocation, you’ll find that even though they provide lower per unit pricing, they are shipping more waste, and waste in incorrect streams, from your facility.

Also, it is imperative that quality does not suffer as a result of the bidding process. Often times, the lowest bidder may not have the capability to offer the customer-intimate services needed to provide a safe, compliant, and patient-focused healthcare environment.

Now that you understand these two simple, yet hugely important barriers to success, it's time to start working on waste cost reduction. Click below to download our whitepaper, and discover tactics for reducing waste costs and improving sustainability.