The Healthcare Hub

How to Reduce Hospital Waste: Cost-Saving Strategies for Healthcare

Kara L. Nadeau, Healthcare Industry Contributor

Friday, November 3, 2023

Healthcare waste has a significant impact on the environment, human lives, and healthcare costs. Let's take a look at common categories of health care waste, the benefits of medical waste management and reduction, strategies for waste minimization, and and success stories from health care facilities that have reduced their waste generated.

Table of contents

Healthcare has a waste problem
Types of healthcare waste
Benefits of waste reduction
Cloud ERP creates waste reduction opportunities
Strategies to reduce supply chain waste
Tackling energy consumption waste
Using data and analytics to reduce costs
The role of value-based care
Case studies about waste reduction

Overview: Healthcare has waste a problem

Healthcare waste management is a complex and costly component of healthcare delivery. Hospitals produce more than 5 million tons of waste each year; that's over 29 pounds of waste per bed per day, according to Practice Greenhealth.

Waste is generated in practically every step of care delivery, including cardboard/paper product packaging in the supply chain, single use items in care delivery, food and supply waste from the cafeteria and patient meal services - to name just a few areas.

The U.S. health care sector is responsible for 8.5% of the country’s greenhouse gas emissions (e.g., carbon dioxide, methane, ozone), which exacerbate climate change and its negative health impacts. An estimated 15% of total healthcare waste is categorized as hazardous waste, infectious waste, toxic substances or radioactive waste.

When it comes to medical waste disposal costs, consider how the medical waste management market size is expected to grow by USD 3.32 billion between 2022 and 2027.

The U.S. Environmental Protection Agency (EPA), Centers for Disease Control and Prevention (CDC), Occupational Safety and Health Administration (OSHA), the Department of Agriculture (USDA), the Federal Emergency Management Agency (FEMA), Department of Transportation (DOT) and state environmental and health departments provide guidance and requirements related to health care waste management.

U.S. healthcare facilities must have in place comprehensive waste management plans for categorizing healthcare waste, protecting workers who handle regulated medical waste, infectious disease management of waste, medical waste transport, and other key factors.

Furthermore, the U.S. Department of Health and Human Services (HHS) has called on healthcare organizations to reduce their emissions by 50% by 2030 and achieve net zero by 2050.

Types of Healthcare Waste

There are many different types of healthcare waste. Here are some of the key categories according to the World Health Organization and Practice Greenhealth.

Waste generated by medical activities

Infectious waste
Pathological waste
Sharps waste
Chemical waste
Pharmaceutical waste
Cytotoxic waste
Radioactive waste

Waste generated by healthcare facilities

Construction and demolition debris
Energy waste
- Operating rooms are a major source of healthcare waste. They consume three to six times as much energy per square foot as any other part of a hospital; and produce more than 30% of a hospital's total waste and two-thirds of its regulated medical waste that requires special disposal.
Non-hazardous or general waste
Solid waste
Universal waste
Water waste

Healthcare spending waste

According to the Peter G. Peterson Foundation, hundreds of billions of dollars fall into the "wasteful spending category" every year. Here are the most common sources of financial waste in hospitals by volume.

Administrative waste
Operational waste (including medical/surgical supply waste)
Inefficient spending

Benefits of Hospital Waste Reduction

Reducing waste produced during healthcare delivery has significant benefits, including environmental sustainability, resource availability, cost savings, improved community health, and improved reputation among those health facilities that embrace and promote their efforts to successfully reduce health care waste.

Environmental impact

"On a global average basis, healthcare systems account for over 4% of global CO2 emissions," according to the World Economic Forum; therefore, health care facilities have a significant opportunity to lessen their environmental impact (e.g., switching to renewable energy, shortening supply chains, etc.).

Higher income countries, including the U.S., have in place supporting infrastructure and regulations designed to support a hospital's waste management plan, particularly when it comes to protecting against health risks and adverse health effects - health hazards related to final disposal of red bag waste (e.g., unsafe medical injections, infectious wastes), exposure to potentially harmful microorganisms, and wastes that pose health risks indirectly (e.g., pollution from waste incineration).

On the other hand, lower and middle income countries often lack the resources and capability to reduce health risks of medical waste (e.g., safe management practices, modern incinerators fitted with special gas-cleaning equipment, etc.).

Cost containment

Researchers have reported that the "economic costs associated with medical waste are staggering, ranging from $760 billion to $935 billion, which accounts for approximately 25% of total US health care spending." From wasted resources (e.g., energy, water), to wasted supplies, to the costs of proper waste management, particularly treatment and disposal of hazardous waste, healthcare organizations have many opportunities to reduce waste generated and expenses incurred.

Supply availability

"Hospital supply expenses per patient increased 18.5% between 2019 and 2022, outpacing increases in inflation by nearly 30%." Additionally, supply shortages continue to plague health workers and hospital patients. Maximizing use of supply inventory by reducing wasted items (expired, open but unused) can help ensure supplies are available when they are needed.

Community impact

"The number of deaths attributable to U.S. health care pollution is already equal to the deaths from preventable medical errors," according to Christy Foster, director of sustainability at Stanford Medicine Children’s Health. Addressing domestic waste in the areas of reducing energy consumption, transportation emissions, and greenhouse gas emitting inhaled anesthetics, can decrease pollution related health hazards, contributing to healthier lives in its community.

Reputation

Healthcare consumers (aka patients) and health workers are increasingly aware of the impacts of health care waste - from higher costs to environmental impacts. Health care facilities that take steps to reduce medical waste are likely to viewed more favorably by their employees and the patients they serve.

Cloud ERP: creating waste reduction opportunities

A healthcare organization can't determine where it is wasting resources and money - let alone address these issues - without transparency into its operations. An integrated, digital technology infrastructure that generates accurate, complete and timely data is critical to waste and cost savings efforts.

This digital backbone has at its foundation a cloud-ERP system that seamlessly integrates with other systems and data sources necessary for healthcare waste and cost analysis (e.g., EHR, financial systems) and drives process automation and data capture.

The seamless integration of cloud-ERP technology opens the door for countless healthcare waste reduction and cost savings opportunities. On the front end of the procure-to-pay cycle, healthcare organizations can leverage GHX Marketplace to direct requisitioners toward purchases aligned to meet their overall goals. Contract compliance, where buyers are directed to purchase supplies on a group purchasing organization (GPO) or manufacturer contract, is one way to contain costs.

Here are the four key steps to implementing directed buying in support of environmental, social, and governance (ESG) goals with GHX Marketplace.

Establish ESG priorities, such as environmentally-responsible procurement.
Define and measure current state to set objectives.
Identify suppliers and/or products involved.
Prioritize preferred vendors/items to direct spending.

💡 Read the full guide: How to Make ESG a Supply Chain Priority for Healthcare in 2024

How to reduce supply chain waste

"The lion’s share of emissions — 71% — are primarily derived from the health care supply chain (Scope 3) through the production, transport, and disposal of goods and services, such as pharmaceuticals and other chemicals, food and agricultural products, medical devices, hospital equipment, and instruments," reported Health Care Without Harm.

Supplier and supply selection

Many health care wastes occur even before a product reaches the door of a hospital. The manufacturers and suppliers of health care products play a tremendous role in waste reduction and waste management. Suppliers that engage in wasteful practices, such as high energy use, long supply chains that require various modes of emission generating transportation, and/or excessive product packaging, contribute to overall healthcare waste.

Scope 3 emissions, defined as "those which are not produced by a company itself but part of its full value chain" present "significant opportunities for synergies and collaboration." Selecting suppliers that engage in sustainable practices can help health care facilities reduce their overall waste.

Evaluating medical equipment based on long-term waste generation is another strategy. As Practice Greenhealth points out, "Medical devices and equipment cost more than their initial purchase price. Maintenance, energy demands, disposal costs, and other long-term costs of ownership can drastically change the lifetime price tag of products and equipment."

On its website, Practice Greenhealth offers a cost assessment tool "to compare products to identify cost savings and best value with the ultimate goal of minimizing an organization’s environmental footprint and improving health."

Procurement activities

Consolidating supply procurement activities under the hospital's supply chain team is another way to address health care waste. When requisitioners from across a hospital place multiple orders for the same items outside of the enterprise resource planning (ERP) system and beyond the view of supply chain this can lead to manufacturers sending multiple shipments to the same hospital.

The more shipments, the greater the volume of emissions generated from transportation modes and use of containers and packaging during transport. When the supply chain team has visibility and control over procurement, they can work with internal requisitioners and suppliers to reduce such waste.

Inventory control and management

Increasing visibility to supplies used in health care activities can help supply chain leaders better control inventory and reduce the potential for health care waste. A critical step is transitioning inventory management from manual, disjointed supply management processes to those that are digital, automated and consolidated.

Real-time visibility into supply status throughout a health system, hospital or other facility helps healthcare supply chain teams make data-driven decisions - right-sizing inventory levels to ensure clinicians have what they need while at the same time reducing wastes generated.

Physician preference card accuracy

A major driver of waste in the OR is physician preference card inaccuracy. Physician preference cards have been described as a recipe card for surgical supplies - instructing perioperative teams on what supplies to prepare for a patient's case.

Historically they have been based on - as the name implies - physician preference. Dr. X requires these items to perform X procedure. But because they are typically managed manually and not updated on a regular basis, the cards often contain items that the physician no longer needs. As a result, surgical teams unwrap items in preparation for a case that go unused, and in many cases, must be discarded.

Automating physician preference card updates at the point of use - using data on product consumption in the OR to record what was actually used in a case and updating cards accordingly - holds tremendous potential in reducing health care waste.

How to reduce the cost of energy consumption

Hospitals are like miniature cities in some respects; they require energy to run everything from lighting in patient rooms to medical imaging equipment (e.g., MRI machines).

Updating infrastructure is one way to reduce the cost of energy consumption, such as more energy efficient HVAC systems, which can account for nearly half of a hospital’s total energy use. One Pennsylvania hospital dropped its overall campus energy intensity by 4% through HVAC optimization, saving $300,000 each year on electricity costs.

Even simple changes, like replacing traditional 36 W exit signs with 5 W LED signs can save a typical 600-bed hospital with 300 signs an estimated $14,755 annually.

The U.S. Department of Energy (DOE) offers low-carbon technology strategies for hospitals on its website, including areas such as lighting, HVAC, controls and analytics.

How to reduce the cost of waste

Looking at the cost of waste, there are costs associated with wasted supplies and resources, and the expenses associated with disposing of waste produced (e.g., waste treatment, waste handlers, waste disposal sites, medical waste incinerators, safe management of toxic or infectious materials, etc.).

With regard to non-hazardous waste, take the example of sterile wrap, a plastic polypropylene material used to wrap surgical instruments and trays to keep them contaminant free. The EPA estimated it accounts for 19% of all OR waste.

Studies show hospitals that sell the used wrap to recyclers versus throwing it out can generate significant savings. One U.S. hospital's department of neurosurgery conducted a wrap recycling pilot program with projected annual cost avoidance of $174,240 plus $5,000 revenue from sales of the used wrap.

Clinical integration: using data and analytics to reduce costs

When it comes to health care activities aimed at reducing wastes and costs, the healthcare supply chain is one area where health systems and hospitals are leveraging data and analytics to identify opportunities and measure their impacts.

With insights into procurement and consumption patterns for supply categories and specific items, they can better predict future demand and plan accordingly - right sizing inventory levels and reducing the financial impact of wasted supplies.

Perhaps one of the greatest opportunities for cost savings and waste reduction comes from the clinically integrated supply chain, where supply chain professionals and clinicians collaborate to evaluate the overall cost, quality and outcomes impacts from purchasing and using specific items in care delivery.

For example, GHX data and analytics solution facilitates level of analysis. With physician-level analytics, users can identify physician variation at the case level, and evaluate differences in physicians’ outcomes and device cost per case for a given procedure; access market price data to determine whether they are overpaying for items; and compare clinically and functionally similar products across dozens of categories. With this evidence-based information in hand, supply chain and clinical teams can make informed decisions for sourcing and value analysis.

The role of value-based care

Looking at health care waste from a broader viewpoint, one that encompasses unnecessary care delivered and assets overused, the costs and resource implications are even more staggering. The U.S. spends more on health care than any other country, with studies estimating that approximately 30% of health care spending may be considered waste.

One of the main goals of value-based care is to reduce this category of waste by compensating healthcare organizations based on the value - not volume - of care delivered. Health Affairs defines value-based payment as:

"A systemic intervention with the potential to affect all drivers of excess health spending and growth, whether those drivers are prices, administrative waste, clinical waste (including excess volume or inefficient mix of care), or other factors."

In 2023, the Health Affairs Council On Health Care Spending And Value released a comprehensive report on drivers of U.S. health care spending and proposed interventions. It can be accessed here.

Case studies: examples of healthcare waste reduction

U.S. healthcare organizations have stepped up efforts to reduce waste generated, with some making tremendous strides in their waste management activities.

Inventory management

Over the last decade, GHX Inventory Count Services has conducted 11,000+ inventory counts, totaling over $21 billion in inventory. In the course of their work, these audits have identified significant sources of waste and hidden value.

Nearly $200K worth of expired products during hospital inventory count
Inventory count finds $46 million in hidden value at one hospital

Carbon footprint

Kaiser Permanente became the first carbon neutral health system in the U.S. in 2020 through "innovations in energy use, construction and building strategies, supply chain, food systems, finance, and clinical practice that promote community health."

Providence has made environmental stewardship an organization-wide priority with impactful results:

A 10M+ kilowatt hour reduction of electricity, 90k+ therm reduction of natural gas, and a 78% reduction in volatile anesthesia GHG emissions.
Providence Hood River Memorial Hospital and Providence St. Patrick Hospital have reduced waste to landfills, incinerators and autoclave by 50%.
Providence in Missoula, Montana achieved 37% less food waste to landfills, resulting in $100k in cost savings annually.

Energy and facilities management

UPMC has achieved a number of "firsts" in reducing health care waste:

First regional health care organization to collaborate with the DOE on developing a health care energy efficiency program.
First U.S. health care organization to insert a clean construction requirement into construction requests for proposals and contracts.
UPMC East was the first regional LEED certified hospital built from the ground up.
UPMC Children's Hospital of Pittsburgh was the first LEED certified built hospital in Pennsylvania.

Common FAQs about reducing waste in hospitals

Q. What are the environmental hazards associated with hospital waste?

A. Greenhouse gas (GHG) emissions, toxic and environmental pollution, sharps inflicted injuries, drug-resistant microorganisms.

Q. What regulations govern hospital waste management?

A. Those from the EPA, CDC, OSHA, USDA, FEMA, DOT and state environmental and health departments.

Q. How can hospitals engage staff in waste reduction efforts?

A. Identifying waste sources, educating on the impacts of waste, implementation of a formal waste management program driven from the top down.

Q. What are some innovative technologies for hospital waste reduction?

A. Directed buying toward sustainable suppliers and products; cloud-based technologies and advanced analytics to gain visibility to waste, identify waste drivers, and measure the impact of interventions.

Disclaimer: The third-party contributor of this piece is solely responsible for its content and accuracy, and the views expressed do not necessarily reflect the opinion of GHX.