Group purchasing organizations and alliances are studying various options to help their members manage and dispose of infectious and other waste. These include contracting with national waste management companies, working with regional haulers, building incinerators or providing waste management consulting services.
Premier Hospitals Alliance, Westchester, Ill., for example, is investigating regional waste programs for its hospitals. AmeriNet Inc., St. Louis, appears to be edging toward signing a contract with a national waste company, but is being cagey about revealing any details.
Daughters of Charity National Health System also expects to have a national contract finalized in the near future.
But there's far from universal agreement that GPOs, alliances, or multi-hospital systems can achieve any significant savings or success with these services. MedEcon, for one, recently decided to avoid this area for the time being.
A few GPOs, particularly local and regional groups, are already experimenting with waste contracts and services, with a fair degree of success.
Medical waste is a frequent topic of discussion at industry meetings, and GPOs and alliances of all sizes are searching for the most effective ways to help hospitals cope with the soaring costs and growing headaches. But they're hampered by complicated federal and state regulations that are becoming more restrictive.
National GPOs and alliances face the major problem of finding a single waste hauling company that can meet the needs of their diverse members geographically and ensure that each facility complies with code.
As a result, a number of GPOs and multi-hospital systems are looking into regional hauling contracts. By contracting with several regional companies, these GPOs and alliances should have a better chance of avoiding potential liabilities and tailoring an agreement that benefits the majority of its members.
But a consultant who follows waste management and a large, national GPO question whether hospitals will use waste hauling contracts. They say multi-hospital systems and national GPOs should leave the negotiations for such contracts to the individual institutions. The market for these services, they insist, is still basically a local market.
"We have been looking at the issue of waste management for more than a year and have decided not to implement a group contract yet," said Niklaus Fincher, equipment program director at MedEcon Services Inc., Louisville, Ky. (MedEcon has been and is currently involved in discussions with WMI Medical Services, a division of Waste Management Inc., and Browning-Ferris Industries).
"Hauling contracts are difficult for a group because of regional differences" in vendors and laws, he said. "If large groups are doing this, they won't be successful. The waste issue is clouded enough without the groups getting involved."
Instead, some of MedEcon's hospitals are getting together and setting up their own arrangement. "Members are asking us to provide experts on the regulations," Fincher said. "We will play a consulting role."
"Hospitals won't use (group) purchasing contracts," said Nelson Slavik, president of Environmental Health Management Systems Inc., South Bend, Ind. "I don't know of any GPO where it has worked. Because of the (potential) liabilities involved and the cost, each hospital will make its own decision.
"Hospitals don't want negative fallout from what someone else has done," he continued. "They have have cradle-to-grave responsibility (for complying with regulations)."
Another disadvantage of a GPO agreements for waste hauling is that prices vary by region, and groups tend to want to set one price, Slavik said. Most hospitals want control over pricing, he added, and having their waste hauled can be very expensive. He said that in some areas, hauling costs range from 40 cents to 60 cents per pound on average. Treating waste on site costs 10 cents to 15 cents per pound, on average.
Incinerators, however, create their own problems. Some states are making it increasingly difficult for hospitals to obtain licenses for new incinerators. This prompts many hospitals to look to their GPO or alliance for guidance.
Regional take action
Several regional alliances or multi-hospital systems have signed waste management contracts or are studying treatment options. Shared Services for Southern Hospitals Inc., Marietta Ga., signed a three-year agreement for waste management and recycling services in August with MEDX Inc., Miami, a division of Attwoods Inc. (see HMM, August 1991, p. 6). The group recently extended the agreement by additional year to run through 1995.
Sixty of SSSH's 318 members are now participating in the agreement in one form or another, compared with 10 members in its previous contract with MedX, said Sandra Green, senior vice president of professional services. Fifty-four members are using basic pick-up services and the remainder are using sharps disposal services. Between 5% and 10% of participants are using both the pick-up and sharps disposal services.
Participation in this agreement to date has exceeded expectations, according to Green. "It's harder to get participation with a service contract than a product contract," she said. "We decided to extend the agreement because it takes a long time to build utilization. It's a hard service to market."
Similarly, SunHealth Corp., Charlotte, N.C., signed a three-year contract with WMI Medical Services, a division of Waste Management Inc., in August 1990. Fifty of SunHealth's 236 members, particularly shareholder physician clinics, are now using the contract in some form.
"GPOs couldn't pull this off," said Steve Mullis, materials services program director.
Hospital participants are using WMI's services primarily as back-up when their incinerators go down. Because most of the alliance's hospitals have incinerators, Mullis did not not have high expectations for the agreement. He now estimates that potential purchases will reach $11 million over the life of the agreement and potential member savings will reach $600,000.
The agreement provides medical waste transportation, treatment and disposal services for biomedical hazardous waste. The alliance is now looking for ways to cover chemical and solid waste treatment and handling along with asbestos abatement, Mullis said.
Pricing is figured on an individual-hospital basis. The hospital negotiates with WMI and SunHealth gets them additional services, Mullis explained. "We chose WMI because they make sure that our hospitals are kept up to code," he said. "We looked at lots of companies, but they couldn't tell me how the regulations differed by state."
The Metropolitan Chicago Healthcare Council (MCHC) is looking at the possibility of constructing an incinerator to serve local hospitals, according to Karen Hughes, vice president.
A recently completed feasibility study, conducted by a task force of 26 member hospitals, indicated a regional infectious waste-treatment facility could save these facilities a total of $2 million to $4 million annually, while providing safe and effective disposal methods.
The study estimated total capital costs for a regional infectious waste-only treatment system at $3.7 million to $6.6 million, with a payback period of one to two years. A regional system for treating both infectious and general waste would cost about $28 million and its payback period would be about 6.5 years.
The 26 task force hospitals currently generate 7.7 million pounds of infectious waste and 48.7 million pounds of general waste annually. The council's 87 member hospitals generate an estimated 23.5 million pounds of infectious waste and 149 million pounds of general waste annually.
Half of the task force hospitals treat infectious waste on site, using a variety of methods such as autoclaving and incineration. The other 13 use contract haulers.
MCHC's study revealed that using contract haulers to dispose of the waste from the 26 hospitals would cost $2.6 million for general waste and $3.2 million for infectious waste annually, assuming an average hauling price of 5 cents a pound for general waste and 41 cents a pound for infectious waste.
The task force then evaluated three methods for waste treatment: thermal (autoclaving, electric plasma arcing, incineration, laser, microwaving and pyrolysis); chemical, and irradiation. Incineration and autoclaving/shredding ranked the highest and will probably be used if the Council decides to build a regional medical waste treatment facility.
Premier should have a contract for solid and medical waste by the second quarter of 1992. For two months, the alliance has been investigating waste management and treatment options.
After interviewing a number of vendors, Premier says that a regional agreement will be likely. "The alliance is looking at regional programs that provide treatment options such as incineration and microwaving," according to Deborah Simecek, director of support services.
"If we sign regional contracts, the autonomy would still stay in the hospital," she said. "We believe that our hospitals will have the most control this way, especially for medical waste."
A key to the agreement, she added, is adequate consulting. Premier has been surveying its 108 hospitals to determine the direction it should take in waste management. The results of this survey will be presented to members next month.
GPOs move cautiously
American Healthcare Systems, San Diego, has had discussions with both national and regional vendors, but is "going to take its time" in this area, said Jack Bernard, vice president of corporate planning and marketing.
AmeriNet is in the process of negotiating an agreement with a national waste company that it would not name. Daughters of Charity National Health System, St. Louis, is negotiating with two vendors for medical and solid waste-hauling services. "Our members are interested in a national waste hauler," said Jonah Hughes, vice president, purchasing.
Hughes believes hospitals will use purchasing contracts for waste hauling because it is to their advantage. "Collectively, the GPOs and alliances will be able to command more favorable pricing and demand the kind of tracking records required by the EPA and local authorities" under national agreements, he said. "Also, the specific needs of hospitals can be better addressed where there is a large volume of participation."
