& EPA
United States
Environmental Protection
Agency
Office of Air Quality
Planning and Standards
Research Triangle Park, NC 27711
EPA-453/R-97-007b
July 1997
Air
Hospital/Medical/Infectious
Waste Incinerators:
Background Information for
Promulgated Standards and
Guidelines -
Analysis of Economic Impacts
for Existing Sources
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EPA-453/R-97-0076
r^
Hospital/Medical/Infectious
Waste Incinerators: Background
Information for Promulgated Standards
and Guidelines - Analysis of Economic
Impacts for Existing Sources
U.S. EPA
OAQPS, AQSSD, ISEG
July 1997
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DISCLAIMER
This report is issued by the Office of Air Quality Planning and Standards, U.S. Environmental
Protection Agency. Mention of trade names and/or commercial products is not intended to
constitute endorsement or recommendation for use. Copies of this report are available free of
charge to Federal employees, current contractors and grantees, and non-profit organizations ~ as
supplies permit ~ from the Library Services Office (MD-35), U.S. Environmental Protection
Agency, Research Triangle Park, North Carolina 27711 (919-541-2777) or, for a nominal fee,
from the National Technical Information Service, 5285 Port Royal Road, Springfield, Virginia
22161 (703-487-4650).
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L INTRODUCTION
On February 27, 1995, the EPA published the proposed Emission Guidelines (EG) for existing
medical waste incinerators (MWIs). The proposal was the result of several years of effort
reviewing available information in light of the Clean Air Act requirements. Following proposal, a
large number of comment letters were received, some including new information and some
indicating that commenters were in the process of gathering information for the EPA to consider.
The large amount of new information that was ultimately submitted addressed every aspect of the
proposed standards and guidelines, including: the existing population of MWIs; the performance
capabilities of air pollution control systems; monitoring and testing; operator training; alternative
medical waste treatment technologies; and the definition of medical waste. In almost every case,
the new information has led to different conclusions. One change made to the final rule as a result
of comments regarding the definition of medical waste has been a change in the title of the
rulemaking. For reasons discussed in other documents, the official title of the rulemaking is
"Hospital/Medical/Infectious Waste Incinerators" or "HMTWI." However, for purposes of this
document, the terms "MWI" and "HMIWI" should be viewed as interchangeable.
The purpose of this revised economic impact analysis (EIA) document is to reassess the economic
impacts of new regulatory options that have been developed for existing MWIs. The potential
economic impacts of four EG control options for existing MWIs were originally evaluated in
Medical Waste Incinerators - Background Information for Proposed Standards and Guidelines:
Analysis of Economic Impacts for Existing Sources.' An addendum was subsequently prepared
to estimate the potential economic impacts of a fifth control option.2 The economic impacts
presented in this document should be viewed as a revision to the original economic impact
documents.
H. EXECUTIVE SUMMARY
Industry-wide impacts presented in this analysis include estimates of the change in market price
for the services provided by the affected industries, the change in market output or production,
the change in industry revenue, and the change in affected labor markets in terms of the number of
employees lost. Industries that generate medical waste (hospitals, nursing homes, etc.) are
expected to experience average price increases in the range of 0 to 0.14 percent, depending on the
industry, regulatory option, and scenario analyzed. These industries are expected to experience
output and employment impacts in the range of 0 to -0.18 percent. In addition, revenue impacts
for these industries are expected to range from an increase of 0.05 percent to a decrease of 0.04
percent. An increase in industry revenue will occur if demand for the industry's service is
relatively price-inelastic, i.e., between -1 and 0. Such a price elasticity indicates that output is not
very responsive to a change in price, specifically that the percentage decrease in output will be
less than the percentage increase in price. Since revenue is the product of price and output, a less
than proportional change in output compared to price means that total revenue will increase.
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The following example illustrates how the above price impacts could be interpreted for the
hospital industry. The estimated average industry-wide price increase for hospitals under
regulatory option six (the most stringent regulatory option) and scenario C, switching with no
waste segregation, is 0.03 percent. This can be expressed in terms of the increased cost of
hospitalization due to the regulation. Total nationwide adjusted patient days at hospitals in 1993
were an estimated 304.5 million days. ("Adjusted" patient days include both in-patient days and
the in-patient day equivalent of out-patient visits.) Annualized control costs under regulatory
option six and scenario C are $92,186,286, or $0.30 per adjusted patient day. This means that the
average price increase that an individual would experience for each hospital patient-day is
expected to equal 30 cents.
The estimated average price increase for the commercial medical waste incineration industry is 2.6
percent, regardless of the regulatory option (control requirements for commercial MWIs do not
vary by regulatory option). This price increase is considered achievable because of the cost
advantage (i.e., lower cost per ton of waste burned) - due to economies of scale - that
commercial MWIs have over smaller on-site MWIs.
Impacts were also estimated at the facility level by employing the concept of the model facility,
i.e., by defining key parameters to describe typical facilities in the affected industries. The vast
majority of facilities impacted by the regulation are those that send their medical waste off-site to
be incinerated and will have to pay more for commercial incineration. All impacts on these
facilities are minuscule. At the most, the increased cost of commercial incineration could be
recovered with a price increase of only 0.02 percent. For facilities that operate on-site MWIs
("MWI operators"), impacts are also generally insignificant. Either the cost of controls or the
cost of switching to an alternative medical waste treatment and disposal method could be
recovered with a price increase that does not significantly exceed the market price increase.
Two types of MWI operators may not be able to switch to an alternative, however: commercial
MWI operators, because their line of business is commercial incineration; and small, rural, remote
MWIs (defined as more than 50 miles away from an SMSA and burning less than 2,000 pounds of
medical waste per year), which may not have access to waste hauling and/or commercial
incineration services. For commercial MWI operators, three of the 59 facilities operating the 79
commercial MWIs in the MWI inventory were found to be significantly impacted by the
regulation (under all six regulatory options). These facilities may not have to shut down, though,
considering that they are completely uncontrolled in the baseline and therefore may currently
enjoy a cost advantage over their competitors (most of which are at least partially controlled in
the baseline), and that the regulation will bring about - due to switching away from on-site
incineration - an increase in the demand for commercial incineration services. Impacts are not
significant for small, rural, remote MWI operators under regulatory options one and two. Under
regulatory options three through six, on the other hand, some of these facilities are significantly
impacted and might therefore have to shut down.
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This economic impact analysis examines industries that are directly impacted by the regulation,
namely industries that generate or treat medical waste. Secondary impacts such as those on air
pollution device vendors and MWI vendors were not evaluated due to data limitations. However,
it can be said that air pollution device vendors are expected to experience an increase in demand
for their products due to the regulation. The regulation is also expected to increase the demand
for commercial MWI services. Due to economies of scale, however, there is likely to be a
demand shift from smaller incinerators to larger incinerators. Therefore, vendors of small MWIs
may be adversely affected by the regulation.
In accordance with the Regulatory Flexibility Act of 1980 and its amendment in 1996 by the Small
Business Regulatory Enforcement Fairness Act (SBREFA), an analysis of impacts on small
"entities" - including small businesses, small nonprofit organizations, and small governmental
jurisdictions - was performed. This analysis indicates that the Emission Guidelines will not have a
"significant impact on a substantial number of small entities" under any regulatory option.
Impacts are not significant for the vast majority of medical waste generators that send their waste
off-site to be treated and disposed. Impacts are also not significant for the great majority of MWI
operators that would have the opportunity to switch to an alternative method of medical waste
treatment and disposal if control costs are prohibitive. Some significant impacts were found for
commercial MWI operators under all six regulatory options and for small on-site MWI operators
that are remote from an urban area under regulatory options three through six. These facilities
might not have the opportunity to switch to an alternative medical waste treatment and disposal
method - commercial MWI operators because medical waste incineration is their line of business,
and small, remote MWIs because they may not have access to commercial incineration services.
However, the number of small entities that may be significantly impacted by this regulation is not
considered "substantial". Only one commercial MWI operator, and perhaps at the most half of
the 114 small, remote MWIs identified in the MWI inventory (under regulatory options three
through six only) potentially could have significant impacts as a result of this regulation.
m. BACKGROUND INFORMATION
A. Regulatory Options
At proposal, the EPA examined the impacts of five control options for existing sources but
concluded that all existing MWIs would need good combustion and dry scrubbers to meet the
MACT floors for CO, PM, and HC1. Consequently, the EPA was left to consider only two
control options for MACT.
After proposal, the EPA received numerous comments containing substantially new information.
Review of this new information led to new conclusions in a number of areas: the MWI inventory;
MWI subcategories; performance of emission control technologies; MACT floors; and monitoring
and testing options. As a result, the EPA examined several new regulatory options which merit
consideration in selecting MACT for existing MWIs. This section summarizes these new
regulatory options and the EPA's assessment of their merits.
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Based on the new information submitted to the EPA following proposal of the EG, new MACT
floor emission levels were developed for small, medium, and large MWIs. Next, the EPA
determined the emission control technologies existing MWIs would probably need to meet
regulations based on these floor emission limits. The floor for small existing MWIs requires good
combustion; add-on wet scrubbing systems would not be necessary to meet the MACT floor. For
medium existing MWIs, the MACT floor requires good combustion and a moderate efficiency
wet scrubber. The MACT floor for large existing MWIs requires good combustion and a high
efficiency wet scrubber.
Having identified the emission control technology most existing MWIs would likely install to meet
the MACT floor emission limits, the EPA also reviewed the performance capabilities of other
emission control technologies that would reduce emissions by an amount greater than the MACT
floor level of control. This process enables the EPA to identify more stringent regulatory options
which could be selected as MACT. Table 1 summarizes the emission control technology that
would probably be required for small, medium, and large MWIs to meet the emission limits
specified for each of the regulatory options. The regulatory options are a combination of the
various emission guidelines the EPA believes merit consideration as MACT for existing MWIs.
This table is constructed only for the purpose of organizing and structuring an analysis of the cost,
environmental, energy, and economic impacts associated with determining or selecting MACT for
existing MWIs. In reviewing this table, therefore, there are a couple of important points to keep
in mind.
First, the EG for existing MWIs will not include requirements to use a specific emission control
system or technology; the EG will only include emission limits, which may be met by any means
or by any control system or technology of the MWI owner's or operator's choice. Second, to the
extent possible, it is an objective of the EPA to adopt emission limits in the EG that can be met
through the use of several emission control systems or technologies. Consequently, where not
constrained by the Act, the actual emission limits associated with some of the regulatory options
shown in Table 1 have been selected at a level designed to encourage or permit the use of either
wet or dry scrubbing control systems.
B. Analysis Scenarios
Health care facilities may choose from among a number of alternatives for treatment and disposal
of their medical waste. (It should be noted that these alternatives are generally more limited for
health care facilities located in rural areas than for those located in urban areas.) At the time of
proposal, inventory estimates indicated that fewer than half of all hospitals operated on-site
medical waste incinerators. The clear trend over the past several years has been for more and
more hospitals to turn to the use of alternative on-site medical waste treatment technologies or
the use of commercial off-site treatment and disposal services. Consequently, it is quite likely that
even fewer hospitals now operate on-site medical waste incinerators.
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Given the above data, it can be assumed that more than half of all hospitals today have chosen to
use other means of treatment and disposal of their medical waste rather than operate an on-site
incinerator. This indicates that alternatives to the use of on-site incinerators exist and that they
are readily available in many cases. For other health care facilities, such as nursing homes, etc.,
only a small number of facilities currently operate on-site MWIs. Therefore, for these types of
health care facilities, the percentage of such facilities using alternative means of treatment and
disposal of medical waste - particularly commercial treatment and disposal services - is much
higher, probably 95 percent or more. This further confirms the availability of alternatives to
on-site incineration for the treatment and disposal of medical waste.
A likely reaction and outcome associated with the adoption of the EG for existing MWIs,
therefore, is an increase in the use of these alternatives by health care facilities for treatment and
disposal of their medical waste. It is not the objective of the EPA to encourage the use of
alternatives or to discourage the continued use of on-site medical waste incinerators; rather, it is
the objective of the EPA to adopt the EG for existing MWIs that fulfill the requirements of
Section 129 of the Clean Air Act. In doing so, however, it is clear that one outcome associated
with adoption of these EG is likely to be an increase in the use of alternatives and a decrease in
the continued use of on-site medical waste incinerators. Consequently, it is an outcome the EPA
should acknowledge and incorporate into the analysis of the costs and economic impacts of the
EG.
In this analysis of costs and economic impacts, selection of an alternative form of medical waste
treatment and disposal by a health care facility, rather than continued operation of an on-site
medical waste incinerator including the purchase of emission control technology necessary to
meet the MACT emission limits, is referred to as "switching." Switching was incorporated into
the cost analysis at proposal and was the basis for the conclusion at proposal that adoption of the
proposed EG could lead to as many as 80 percent of health care facilities with MWIs to choose an
alternative means of medical waste treatment and disposal rather than continue operation of their
MWI. However, the economic impacts presented with the proposed EG were only evaluated
using the costs under a "no switching" scenario. Although the ELA presented a qualitative
discussion of the likely possibility of facilities with on-site MWIs deciding to switch to alternative
treatment and disposal methods, the economic impacts under a switching scenario were not
quantified due to time constraints.
Switching has now been incorporated into the cost and economic impact analysis. Three
scenarios are evaluated: one scenario which ignores switching, and two scenarios which consider
switching. Scenario A assumes that each existing MWI remains in operation (i.e., no switching)
and complies with the appropriate regulatory option by purchasing emission control equipment.
This scenario, which results in the highest costs because it assumes no existing MWI will switch
to a less expensive waste disposal method, most likely overstates national costs and economic
impacts and therefore should not be viewed as representative of the EG. It is included only to
fulfill the goal of providing a complete analysis.
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Switching scenarios B and C are considered more representative of the cost and economic
impacts of the EG. Both scenarios assume switching occurs when the cost associated with
purchasing and installing the air pollution control technology or system necessary to comply with
the MACT emission guideline (i.e., a regulatory option) is greater than the cost of using an
alternative means of treatment and disposal.*
The difference between the two scenarios is the assumption of whether or not the medical waste
stream is separated. Some facilities currently separate their medical waste into an infectious
stream and a non-infectious stream. Some commenters have stated it is a good assumption that
hospitals which currently operate on-site medical waste incinerators practice little separation of
medical waste into infectious and non-infectious streams; generally all the waste is incinerated.
Based on estimates in the literature that only 10 to 15 percent of medical waste is infectious and
the remaining 85 to 90 percent is non-infectious, scenario B assumes that only 15 percent of the
waste currently being burned at a health care facility operating an on-site incinerator is infectious
medical waste; the remaining 85 percent is non-infectious medical waste. This non-infectious
waste is municipal waste; it needs no special handling, treatment, transportation, or disposal, and
can be sent to a municipal landfill or a municipal combustor for disposal. Thus, under scenario B,
when choosing an alternative to continued operation of an on-site medical waste incinerator, in
response to adoption of the EG, a health care facility need only choose an alternative form of
medical waste treatment and disposal for 15 percent of the waste stream currently burned on-site
and may send the remaining 85 percent to a municipal landfill. This scenario results in the lowest
costs because 85 percent of the waste is disposed at the relatively inexpensive cost of municipal
waste disposal.
On the other hand, it is unlikely that all health care facilities currently operating an MWI will be
able to, or will decide to, segregate the waste stream currently being burned in their incinerator.
For example, a facility not currently segregating waste may decide that the cost and inconvenience
of training its staff to segregate waste is not acceptable. Scenario C, therefore, assumes that all
medical waste being burned at a health care facility currently operating a medical waste
incinerator is infectious medical waste and must be treated and disposed of accordingly. As a
result, scenario C leads to higher costs than scenario B.
For purposes of determining the impacts of the EG under switching scenarios B and C, the MWI
inventory was separated into commercial (off-site) incinerators and on-site incinerators.
Commercial incinerators were not subject to the switching analyses under scenarios B and C
'Under both scenarios, however, switching is assumed to not be possible for up to 114 small MWIs
(out of a total existing small MWI population of 1,139) that meet two "rural criteria:" located more than 50
miles away from a Standard Metropolitan Statistical Area (SMSA), and burn less than 2,000 pounds of
medical waste per week. This acknowledges that remote and small medical waste generators may have
difficulty getting treatment and disposal service (e.g., it may not be worth the while of commercial providers).
For these units, scenarios B and C do not apply. Only scenario A, no switching, applies.
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because switching to an alternative method of waste disposal is not an option for them. Rather, it
was assumed that commercial facilities will add on the control equipment associated with the EG.
Only the on-site MWIs in the inventory were subject to the switching analyses under scenarios B
andC.
Scenarios B and C represent the likely range of impacts associated with the EG for existing
MWIs. The actual impacts of a MACT emission guideline (i.e., a regulatory option) are most
likely to fall somewhere within the range represented by scenarios B and C.
C. Industry Sectors
Similar to the original El A, this analysis examines the economic impacts of the EG on industries
that generate medical waste and operate on-site MWIs, commercial MWIs, and industries that
generate medical waste but do not operate on-site MWIs. Facilities engaging in the above
activities will generally fall into one of two categories: directly affected facilities, and "off-site
generators."
Facilities in industries that generate medical waste and operate on-site MWIs will be directly
affected by the EG because they will need to initiate some action to comply with the regulation
(i.e., install emission control equipment or switch to an alternative). Costs and economic impacts
associated with these facilities and industries are referred to as direct costs and economic impacts.
Industries belonging to this category include hospitals, nursing homes, and research laboratories.
Also included in this category of directly affected industries are commercial MWIs. Although the
commercial MWI industry does not generate medical waste, it will be required to comply with the
EG by installing emission control equipment.
The analysis also examines the impacts of the EG on facilities that generate medical waste but do
not operate an on-site MWI. Such facilities are termed "off-site generators" in this analysis.
These facilities will be indirectly affected by the regulation because they must send their medical
waste off-site to be treated and disposed. Commercial MWIs or other waste treatment facilities
that provide service to these types of facilities are expected to pass on to their customers at least a
portion of their EG-related cost increases. Off-site generators are therefore expected to have to
pay more for off-site treatment and disposal. Industries belonging to this off-site generator
category include hospitals, nursing homes, research laboratories, funeral homes, physicians'
offices, dentists' offices and clinics, outpatient care facilities, freestanding blood banks, fire and
rescue operations, and correctional facilities.
IV. ECONOMIC IMPACTS
A. Methodology
This section briefly describes the analytical approach used to estimate industry-wide and facility-
specific economic impacts and to evaluate the economic feasibility of switching. All economic
impacts presented in this document were re-estimated using the methodology described in the
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original El A. Therefore, for a more detailed description of the methodology used to estimate
economic impacts, refer to the Background Information for Proposed Standards and Guidelines:
Analysis of Economic Impacts for Existing Sources. The base year for this analysis is 1993.
Therefore, all dollar figures (e.g., costs, prices) are stated at 1993 levels.
Average industry-wide price increases are estimated by comparing annualized control costs to
annual revenue for each affected industry. The ratio of annualized control costs to revenue
represents the average industry-wide price increase necessary to recover control costs. Percent
changes in industry-wide output are estimated in turn using high and low estimates of the price
elasticity of demand. Resulting changes in industry revenue are estimated based on the price and
output calculations. Employment or labor market impacts are estimated assuming they are
proportional to the output impacts.
Facility-specific economic impacts are estimated using model facility information. Facility-specific
price impacts are compared to average industry-wide price impacts to determine if the difference
between the two is significant. A determination of significance - implying that the facility price
increase may not be achievable - is made for all but commercial MWI operators if the facility
price increase exceeds the average industry-wide, or "market," price increase by more than one
percentage point. For commercial MWI operators, the facility price increase is considered
significant if it exceeds the market price increase by more than two percentage points. More
pricing latitude is given to commercial MWI operators for two reasons: 1) commercial
incineration is not subject to the same institutional pricing constraints as the health care sector,
and 2) commercial incineration fees could actually get a boost from the regulation as a result of
switching from on-site incineration and an increase in the demand for commercial incineration
services. Where significance is found, the impact on net income (earnings) of absorbing control
costs is estimated and evaluated.
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-------
The assumption of no switching (scenario A) represents the highest cost and economic impact
scenario. (The exception is commercial MWIs, for which control costs do not vary by scenario.)
Scenario B, switching with waste segregation, represents the lowest cost and economic impact
scenario. As previously discussed, the EPA considers scenario A to be unlikely. Scenarios B and
C should be regarded as more representative of the impacts of the EG.
B. Industry-wide Impacts
1. Industry-wide Annualized Control Costs3
Tables 2A, 2B, and 2C present national capital and annualized control costs for those industries
that operate MWIs ("direct control costs") Annualized control costs are highest under scenario
A (Table 2A). Total annualized costs under scenario A range from $85.2 million for regulatory
option one to $205.2 million for regulatory option six. As previously explained, scenario A
impacts are calculated under the unlikely assumption that all facilities currently operating an MWI
will purchase emission control equipment. This scenario does not allow for the possibility of
switching to alternative methods of waste treatment and disposal.
National costs are lowest under scenario B, which assumes that some facilities currently operating
an on-site MWI will switch to an alternative method of waste treatment and disposal.
This scenario also assumes that those facilities deciding to switch will also segregate their waste.
Total annualized costs under scenario B range from $55.2 million for regulatory option one to
$66.3 million for regulatory option six. The range under scenario C, which assumes switching
with no waste segregation, is $82.2 million for regulatory option one to $130.7 million for
regulatory option six. In comparison to scenario A, costs under scenarios B and C do not vary
significantly among the regulatory options because the cost of some alternative methods (such as
autoclaving) are unaffected by the EG. In addition, control requirements for commercial MWIs
(another alternative to on-site incineration) do not vary by regulatory option. The small changes
in national annualized costs observed among the regulatory options reflect the different number of
facilities expected to switch from on-site incineration to an alternative method of waste treatment
and disposal.
Table 3 presents annual costs for those industries not operating MWIs ("indirect control costs").
Annual costs for these "off-site generators," which are assumed to have their medical waste
incinerated off-site, were calculated by multiplying estimated medical waste generated annually by
the incremental cost for commercial incineration. The incremental cost was calculated by dividing
industry-wide annualized control costs for commercial incinerators by their throughput. The
incremental cost of commercial incineration is calculated to be 0.63 cents per pound under all
regulatory options. Note in Tables 2A through 2C that industry-wide annualized control costs for
commercial MWIs vary insignificantly by regulatory option, increasing only slightly from
regulatory option 4 and regulatory option 5. This is because control requirements do not vary by
regulatory option for commercial MWIs.
13
-------
Table 3
Industry-wide Annual Costs for Industries Not Operating
On-site Medical Waste Incinerators: Existing Sources
Industry
Medical / dental laboratories
Funeral homes
Physicians' offices
Dentists' offices & clinics
Outpatient care
Freestanding blood banks
Fire & rescue operations
Correctional facilities
Total
Medical Waste Generated
Annually (tons per year)
17,600
900
35,200
8,700
26,300
4,900
1,600
3,300
98,500
Annual Control Cost1
$222,115
$ 11,358
$444,230
$109,795
$331,910
$ 61,839
$ 20,192
$ 41,647
$1,243,087
1 Assumes that all medical waste is incinerated off-site at an incremental cost of 0.63 cents per pound, the average cost increase for commercial MWls.
14
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No capital costs are presented in Table 3. This is because off-site generators, which are not
directly impacted by the EG, will not be faced with having to invest in control equipment. Off-site
generators are only impacted by the EG by having to pay higher commercial incineration fees, an
annual cost.
2. Financial and Economic Inputs
The economic impact methodology used in this report is similar to the methodology used in the
original EIA. The types of data inputs needed are the same as in the original analysis. However,
all financial and economic data have been updated to 1993 where possible.
Table 4 presents the relevant financial and economic data for each of the regulated industries.
Specifically, the number of facilities for each industry is reported along with revenue and
employment. Also, where possible, the estimated price elasticity of demand is reported. These
price elasticities are the same as those estimated in the original EIA. Note that an elasticity
estimate is not presented for the commercial MWI industry. This omission is due to a lack of
relevant information about this industry and is further complicated by the uncertainty of the
regulation's impact on the demand for commercial waste incineration.
3. Market Price Increase
The market price increase is defined as the average industry-wide price increase necessary to
recover annualized control costs. It is calculated as the ratio of industry-wide annualized control
costs to revenue. Because most, if not all, of the regulated industries are characterized by local or
regional markets, actual price increases will vary from one location to another according to such
factors as: 1) the number of facilities in the market; 2) the number of facilities operating an MWI;
3) the distribution of MWI sizes; and 4) market structure and pricing mechanisms. Ideally, the
average price increase in each local or regional market would be measured. However, it is not
possible to define and characterize literally hundreds of local and regional markets. Therefore, the
industry-wide price increase, which is an average price increase across all market areas, is used to
represent the average price increase in each individual local or regional market.
As an average, the market price increase does not reflect the range of price increases that all
facilities in an industry would require to recover control costs. The range of price increases
necessary to recover control costs should be particularly wide in industries consisting of both
MWI operators and off-site generators. On average, off-site generators will require a lower price
increase to recover control costs (passed along from commercial MWIs) than MWI operators.
This is because: 1) the average off-site generator is less dependent on off-site incineration than the
average MWI operator is dependent on-site incineration; and 2) MWIs used for commercial
incineration are larger than average, and therefore have relatively low control costs per unit of
waste disposed. Among off-site generators, the price increase necessary to recover control costs
will vary with the degree of dependence on off-site incineration.
16
-------
Table 5A
Industry-wide Percent Price Impacts*: Existing Sources
Scenario A: No Switching
Industry
Hospitals
Nursing homes
Laboratories:
Commercial research
Medical/dental
Funeral homes
Physicians' offices
Dentists' offices and
clinics
Outpatient care
Freestanding blood banks
Fire and rescue operations
Correctional facilities
Commercial incineration
Regulatory Option
One
0.02
0.02
0.05
0
0
0
0
0
0
0
0
2.62
Two
0.04
0.04
0.11
0
0
0
0
0
0
0
0
2.62
Three
0.04
0.04
0.12
0
0
0
0
0
0
0
0
2.62
Four
0.04
0.04
0.12
0
0
0
0
0
0
0
0
2.62
Five
0.04
0.04
0.13
0
0
0
0
0
0
0
0
2.63
Six
0.05
0.05
0.14
0
0
0
0
0
0
0
0
2.63
[ Percent price increases necessary to recover annualized control costs.
17
-------
Table SB
Industry-wide Percent Price Impacts*: Existing Sources
Scenario B: Switching With Waste Segregation
Industry
Hospitals
Nursing homes
Laboratories:
Commercial research
Medical/dental
Funeral homes
Physicians' offices
Dentists' offices and
clinics
Outpatient care
Freestanding blood banks
Fire and rescue operations
Correctional facilities
Commercial incineration
Regulatory Option
One
0.01
0.01
0.03
0
0
0
0
0
0
0
0
2.62
Two
0.01
0.01
0.04
0
0
0
0
0
0
0
0
2.62
Three
0.01
0.01
0.04
0
0
0
0
0
0
0
0
2.62
Four
0.01
0.01
0.04
0
0
0
0
0
0
0
0
2.62
Five
0.01
0.01
0.04
0
0
0
0
0
0
0
0
2.63
Six
0.01
0.01
0.04
0
0
0
0
0
0
0
0
2.63
* Percent price increases necessary to recover annualized control costs.
18
-------
Table SC
Industry-wide Percent Price Impacts*: Existing Sources
Scenario C: Switching With No Waste Segregation
Industry
Hospitals
Nursing homes
Laboratories:
Commercial research
Medical/dental
Funeral homes
Physicians' offices
Dentists' offices and
clinics
Outpatient care
Freestanding blood banks
Fire and rescue operations
Correctional facilities
Commercial incineration
Regulatory Option
One
0.02
0.02
0.05
0
0
0
0
0
0
0
0
2.62
Two
0.03
0.03
0.08
0
0
0
0
0
0
0
0
2.62
Three
0.03
0.03
0.08
0
0 .
0
0
0
0
0
0
2.62
Four
0.03
0.03
0.08
0
0
0
0
0
0
0
0
2.62
Five
0.03
0.03
0.08
0
0
0
0
0
0
0
0
2.63
Six
0.03
0.03
0.09
0
0
0
0
0
0
0
0
2.63
* Percent price increases necessary to recover annualized control costs.
19
-------
Market price increases are presented in Tables 5A, 5B, and 5C. As can be seen, scenario A
(Table 5 A) produces the largest impacts. However, because this scenario is unlikely to occur,
attention should be focused on the impacts estimated under scenarios B and C. Scenario B, which
assumes switching with waste segregation, produces average industry-wide price increases of
0.01 percent under all regulatory options for both hospitals and nursing homes. The commercial
research laboratory industry is expected to experience a price increase ranging from 0.03 to 0.04
percent, depending on the regulatory option.
Under scenario C, which assumes switching without waste segregation, the average industry-wide
price increases for both hospitals and nursing homes are 0.02 percent under regulatory option one
and 0.03 percent under regulatory options two through six. For commercial research labs, the
price impacts range from 0.05 to 0.09 percent, depending on the regulatory option.
Under all three scenarios, the price impacts are negligible (not even registering at two decimal
places) for medical and dental laboratories, funeral homes, physicians' offices, dentists' offices
and clinics, outpatient care, freestanding blood banks, fire and rescue operations, and correctional
facilities.
With the exception of the commercial MWI industry, all market price increases in Tables 5 A
through 5C are under one percent and are therefore considered achievable. The low values partly
reflect the fact that in each industry, the majority of facilities do not operate an MWI.
Tables 5A through 5C also present average industry-wide price impacts for the commercial MWI
industry. The impacts are 2.62 or 2.63 percent, varying only slightly by regulatory option because
control requirements for commercial MWIs do not vary by regulatory option. Also, the impacts
are the same under all three scenarios because switching is not an option for commercial MWIs.
Although the estimated price increases for this industry exceed one percent, they are considered
achievable because of the cost advantage (i.e., lower cost per ton of waste burned) - due to
economies of scale - that commercial MWIs have over smaller on-site MWIs. This cost
advantage, which will be made even more pronounced by the EG, is a strong basis for the
argument that many facilities will switch from on-site incineration to off-site disposal in response
to the regulation.
4. Output. Employment, and Revenue Impacts
The market price increase will result in output, employment, and revenue impacts. This analysis
presents a range of output, employment, and revenue impacts due to the use of two price
elasticity of demand estimates for each industry. These impacts are not estimated for the
commercial MWI industry due to a lack of relevant financial and economic information for the
industry.
Since demand is not perfectly inelastic in any of the impacted industries, output will decline in
response to the market price increase. The relationship between price and output (or quantity
demanded) can be captured by the following constant-elasticity demand function:
20
-------
Where: QD = Quantity Demanded
a = a constant
P = Price
e = Price Elasticity of Demand
By also specifying time periods 0 and 1, the percent change in output (%AQ) can be solved in the
following way:
Qo = <
e, = <
Qo
[P0(l
Pe
ro
= (1 + %AP)e - 1
Output impacts can be calculated by setting %AP equal to the market price increase. These
impacts are presented in Tables 6A, 6B, and 6C. Due to a relatively small market price increase
and/or relatively inelastic demand, all of the output impacts are less than one percent. The
greatest output decreases are experienced by commercial research labs, but even these are
insignificant: up to 0.18 percent for regulatory option six under scenario A, up to 0.06 percent
for regulatory option six under scenario B, and up to 0.11 percent for regulatory options three
through six under scenario C.
21
-------
Table 6A
Industry-wide Output, Employment, and Revenue Impacts: Existing Sources
Scenario A: No Switching
Industry
Hospitals
Output decrease (%)
Employment loss
Revenue increase or (decrease) (%)
Nursing homes
Output decrease (%)
Employment loss
Revenue increase or (decrease) (%)
Laboratories:
Commercial research
Output decrease (%)
Employment loss
Revenue increase or (decrease) (%)
Medical/dental
Output decrease (%)
Employment loss
Revenue increase or (decrease) (%)
Funeral homes
Output decrease (%)
Employment loss
Revenue increase or (decrease) (%)
Physicians' offices
Output decrease (%)
Employment loss
Revenue increase or (decrease) (%)
Dentists' offices and clinics
Output decrease (%)
Employment loss
Revenue increase or (decrease) (%)
Outpatient care
Output decrease (%)
Employment loss
Revenue increase or (decrease) (%)
Freestanding blood banks
Output decrease (%)
Employment loss
Revenue increase or (decrease) (%)
Fire and rescue operations
Output decrease (%)
Employment loss
Revenue increase or (decrease) (%)
Correctional facilities
Output decrease (%)
Employment loss
Revenue increase or (decrease) (%)
Regulatory Option
One
0-0.01
0-265
0.01-0.02
0.01
97-198
0.01
0.05-0.07
87-115
(0.02)-0
0
2-4
0
0
0
0
0
0-1
0
0
1
0
0
0-1
0
0
0
0
0
0
0
0
0
0
Two
0-0.01
0-550
0.03-0.04
0.01-0.03
203-412
0.01-0.03
0.11-0.15
180-239
(0.04>0
0
2-4
0
0
0
0
0
0-1
0
0
1
0
0
0-1
0
0
0
0
0
0
0
0
0
0
Three
0-0.01
0-567
0.03-0.04
0.01-0.03
209-424
0.01-0.03
0.12-0.16
185-246
(0.04>0
0
2-4
0
0
0
0
0
0-1
0
0
1
0
0
0-1
0
0
0
0
0
0
0
0
0
0
Four
0-0.01
0-593
0.03-0.04
0.01-0.03
219-444
0.01-0.03
0.12-0.16
194-258
(0.04>0
0
2-4
0
0
0
0
0
0-1
0
0
1
0
0
0-1
0
0
0
0
0
0
0
0
0
0
Five
0-0.01
0-623
0.03-0.04
0.01-0.03
230-466
0.01-0.03
0.13-0.17
204-271
(0.04)-0
0
2-4
0
0
0
0
0
0-1
0
0
1
0
0
0-1
0
0
0
0
0
0
0
0
0
0
Six
0-0.02
0-660
0.03-0.05
0.02-0.03
243-494
0.01-0.03
0.14-0.18
216-287
(0.04>0
0
2-4
0
0
0
0
0
0-1
0
0
1
0
0
0-1
0
0
0
0
0
0
0
0
0
0
22
-------
Table 6B
Industry-wide Output, Employment, and Revenue Impacts: Existing Sources
Scenario B: Switching With Waste Segregation
^ Industry
Hospitals
Output-decrease (%)
Employment loss
Revenue increase or (decrease) (%)
Nursing homes
Output decrease (%)
Employment loss
Revenue increase or (decrease) (%)
Laboratories:
Commercial research
Output decrease (%)
Employment loss
Revenue increase or (decrease) (%)
Medical/dental
Output decrease (%)
Employment loss
Revenue increase or (decrease) (%)
Funeral homes
Output decrease (%)
Employment loss
Revenue increase or (decrease) (%)
Physicians' offices
Output decrease (%)
Employment loss
Revenue increase or (decrease) (%)
Dentists' offices and clinics
Output decrease (%)
Employment loss
Revenue increase or (decrease) (%)
Outpatient care
Output decrease (%)
Employment loss
Revenue increase or (decrease) (%)
Freestanding blood banks
Output decrease (%)
Employment loss
Revenue increase or (decrease) (%)
Fire and rescue operations
Output decrease (%)
Employment loss
Revenue increase or (decrease) (%)
Correctional facilities
Output decrease (%)
Employment loss
Revenue increase or (decrease) (%)
Regulatory Option
One
0
0-166
0.01
0-0.01
61-124
0-0.01
0.03-0.05
54-72
(0.0 1>0
0
2-4
0
0
0
0
0
0-1
0
0
1
0
0
0-1
0
0
0
0
0
0
0
0
0
0
Two
0
0-179
0.01
0-0.01
66-134
0-0.1
0.04-0.05
58-78
(0.0 1>0
0
2-4
0
0
0
0
0
0-1
0
0
1
0
0
0-1
0
0
0
0
0
0
0
0
0
0
Three
0-0.01
0-195
0.01
0-0.01
72-146
0-0.01
0.04-0.05
64-85
(0.01>0
0
2-4
0
0
0
0
0
0-1
0
0
1
0
0
0-1
0
0
0
0
0
0
0
0
0
0
Four
0-0.01
0-198
0.01
0-0.01
73-148
0-0.01
0.04-0.05
65-86
(0.0 1>0
0
2-4
0
0
0
0
0
0-1
0
0
1
0
0
0-1
0
0
0
0
0
0
0
0
0
0
Five
0-0.01
0-199
0.01
0-0.01
73-149
0-0.01
0.04-0.05
65-86
(0.01)-0
0
2-4
0
0
0
0
0
0-1
0
0
1
0
0
0-1
0
0
0
0
0
0
0
0
0
0
Six
0-0.01
0-202
0.01
0.01
75-151
0-0.01
0.04-0.06
66-88
(0.0 1)-0
0
2-4
0
0
0
0
0
0-1
0
0
1
0
0
0-1
0
0
0
0
0
0
0
0
0
0
23
-------
Table 6C
Industry-wide Output, Employment, and Revenue Impacts: Existing Sources
Scenario C: Switching With No Waste Segregation
Industry
Hospitals
Output decrease (%)
Employment loss
Revenue increase or (decrease) (%)
Nursing homes
Output decrease (%)
Employment loss
Revenue increase or (decrease) (%)
Laboratories:
Commercial research
Output decrease (%)
Employment loss
Revenue increase or (decrease) (%)
Medical/dental
Output decrease (%)
Employment loss
Revenue increase or (decrease) (%)
Funeral homes
Output decrease (%)
Employment loss
Revenue increase or (decrease) (%)
Physicians' offices
Output decrease (%)
Employment loss
Revenue increase or (decrease) (%)
Dentists' offices and clinics
Output decrease (%)
Employment loss
Revenue increase or (decrease) (%)
Outpatient care
Output decrease (%)
Employment loss
Revenue increase or (decrease) (%)
Freestanding blood banks
Output decrease (%)
Employment loss
Revenue increase or (decrease) (%)
Fire and rescue operations
Output decrease (%)
Employment loss
Revenue increase or (decrease) (%)
Correctional facilities
Output decrease (%)
Employment loss
Revenue increase or (decrease) (%)
Regulator}' Option
One
0-0.01
0-255
0.01-0.02
0.01
94-191
0.01
0.05-0.07
83-111
(0.02>0
0
2-4
0
0
0
0
0
0-1
0
0
1
0
0
0-1
0
0
0
0
0
0
0
0
0
0
Two
0-0.01
0-378
0.02-0.03
0.01-0.02
139-283
0.01-0.02
0.08-0.10
124-165
(0.03)-0
0
2-4
0
0
0
0
0
0-1
0
0
1
0
0
0-1
0
0
0
0
0
0
0
0
0
0
Three
0-0.01
0-395
0.02-0.03
0.01-0.02
146-296
0.01-0.02
0.08-0.11
129-172
(0.03>0
0
2-4
0
0
0
0
0
0-1
0
0
1
0
0
0-1
0
0
0
0
0
0
0
0
0
0
Four
0-0.01
0-400
0.02-0.03
0.01-0.02
148-300
0.01-0.02
0.08-0.11
131-174
(0.03)-0
0
2-4
0
0
0
0
0
0-1
0
0
1
0
0
0-1
0
0
0
0
0
0
0
0
0
0
Five
0-0.01
0-410
0.02-0.03
0.01-0.02
151-307
0.01-0.02
0.08-0.11
134-178
(0.03)-0
0
2-4
0
0
0
0
0
0-1
0
0
1
0
0
0-1
0
0
0
0
0
0
0
0
0
0
Six
0-0.01
0-415
0.02-0.03
0.01-0.02
153-310
0.01-0.02
0.09-0.11
136-180
(0.03)-0
0
2-4
0
0
0
0
0
0-1
0
0
1
0
0
0-1
0
0
0
0
0
0
0
0
0
0
24
-------
The impact of the market price increase on industry-wide employment, assuming that employment
is proportional to output (i.e., fixed labor to output ratio), is also presented in Tables 6A through
6C. These impacts are presented in terms of estimated employment losses. As a percent of the
baseline (see Table 4), the employment losses are considered small. (In fact, by definition, the
, percent decrease in employment is equal to the percent decrease in output, which has already been
seen to be insignificant.) At the most (regulatory option six) under scenario A, the number of
employees would decline by up to 660 at hospitals, 494 at nursing homes, and 287 at research
labs (all other industries have minuscule or undetectable impacts). However, because switching is
likely to occur, the impacts are more likely to fall between those shown under scenarios B and C.
At the most (regulatory option six) under scenario C, the number of employees would decline by
up to 415 at hospitals, 310 at nursing homes, and 180 at research labs. At the most (regulatory
option six) under scenario B, the number of employees would decline by up to 202 at hospitals,
151 at nursing homes, and 180 at research labs.
The employment impacts in Tables 6A through 6C do not attempt to quantify some positive
employment impacts expected to occur as a result of the regulation. For example, employment
related to the production of pollution control equipment should increase. In addition, additional
people will be needed to provide training to MWI operators. Also, there should be an increase in
employment related to the production and operation of commercial MWIs and alternative medical
waste treatment and disposal systems.
Revenue will change in response to the market price increase. It will increase if demand is
relatively inelastic (i.e., -1 < e < o) and decrease if demand is relatively elastic (i.e., e < -1). For
example, if demand is relatively inelastic, the percent decrease in output in response to a price
increase will be less than the percent price increase. Since revenue is the product of price and
output, a less-than-proportionate decrease in output implies an increase in revenue. The
following equation can be used to measure the impact on revenue of the market price increase
(and resultant output decrease):
A Revenue = Baseline Revenue * [%AP + %Aฃ> + (%AP * %A0]
Revenue impacts (percent increase or, in parentheses, percent decrease) are also presented in
Tables 6 A through 6C. Revenue decreases only for commercial research labs in the case of the
maximum elasticity (e = -1.33; see Table 4). In all other cases, revenue increases because demand
is relatively inelastic or does not change because demand is unitary-elastic (e = -1). Regardless,
all impacts are small and are not considered significant.
C. Model Facility Analysis
Facility-specific impacts were also estimated for the affected industries. These impacts were
calculated by employing the concept of the model facility. This technique allows an analysis to be
25
-------
Table 7
Model Facility Definitions
Facility
Large Hospital
Medium Hospital
Small Hospital
Nursing Home
Commercial Research
Laboratory
Definition
400 beds
140 beds
40 beds
150 employees
200 employees
MWI Assignment
Large MWI
Medium MWI
Small MWI
Small MWI
Medium MWI
N/A - not available
26
-------
prepared on a more detailed level by defining key parameters to describe "typical" facilities in the
affected industries. The EIA prepared for the proposed rule used cost estimates provided on a
model combustor (i.e., MWI) basis to estimate economic impacts for model facilities. The model
facility concept not only had to incorporate model MWI parameters, (e.g., amount of throughput
to determine size, etc.), but also key financial and economic parameters (e.g., revenue, etc.).
Therefore, a scheme to assign model MWIs to model facilities had to be developed in the original
EIA.
New information received after proposal made it possible for cost estimates to be developed on a
model facility basis, with key model MWI parameters already incorporated into the model facility
concept. Therefore, this document no longer needs to employ the "linking" scheme used to assign
model MWIs to model facilities in the earlier EIA. The model facilities defined in the cost
analysis are presented in Table 7. Note that hospitals are defined in terms of number of beds
while nursing homes and commercial research laboratories are defined in terms of number of
employees. Note also that commercial incineration facilities are not included in the table. This is
because an exception to the model facility approach is made for commercial MWIs. Instead,
facility-specific impacts are calculated for each of the 59 facilities operating the 79 commercial
MWIs in the MWI inventory. (Costs and impacts for commercial MWIs will be presented in the
tables that follow as ranges representing all 59 of the commercial MWI facilities in the inventory.)
1. Model MWI Costs
Tables 8 and 9 present capital (for scenario A) and annualized (for scenarios A, B, and C) costs
for model MWIs. Scenario A has capital costs because it assumes that all facilities currently
operating an MWI will have emission control equipment installed rather than switch to an
alternative technology. Scenarios B and C have no capital costs because switching to an
alternative technology precludes the need to invest in emission control equipment for an on-site
MWI.
For all MWIs other than commercial MWIs and small, rural, remote MWIs (defined as more than
50 miles away from an SMS A and burning less than 2,000 pounds of medical waste per year),
scenario A is an unlikely representation of facility-specific impacts for a couple of reasons. First,
the assumption that some currently operated MWIs will not be replaced by alternative
technologies is unrealistic. The regulation will impose additional costs on MWIs and, therefore,
will make alternative technologies more attractive - from a cost perspective - in comparison.
Second, the model facility analysis under scenario A examines the cost of imposing emission
control costs on "uncontrolled" MWIs in the baseline. Many currently operated MWIs already
have some emission control equipment installed. The costs of meeting any of the regulatory
options would not be from a baseline of "no controls" for these facilities. Therefore, scenario A
represents only the extreme case of MWIs having no emission controls in the baseline. Scenario
A, on the other hand, is the only scenario that applies to commercial MWIs and small, rural,
remote MWIs because they are assumed to not be able to switch to an alternative technology.
27
-------
B
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m ON
co
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ซ CO
ft
ง
ซ! 1
i ^ "^
-------
Table 9
Annual Costs of Switching for Model MWIs1
Scenarios B and C
Model MWI
Small
Urban
Rural2
Medium
Urban
Rural
Large
Urban
Rural
Scenario B - Switching With
Waste Segregation
$5,260
$7,400
$19,944
$28,058
$ 93,584
$131,658
Scenario C - Switching Without
Waste Segregation
$19,200
$31,200
$72,800
$118,300
$341,600
$555,100
1 Switching costs do not vary by regulatory option.
2 Does not apply to facilities that are remote (i.e., more than 50 miles from an SMS A) and burn less than 2,000 pounds of medical waste
per week. Such facilities are assumed to generally not have switching opportunities.
29
-------
Table 10
Annual Costs for Model Facilities Not Operating On-site MWIs: Existing Sources
Industry/Model Facility
Hospitals
<50Beds
50-99 Beds
100-299 Beds
300+ Beds
Nursing Homes
0-19 Employees
Tax-paying
Tax-exempt
20-99 Employees
Tax-paying
Tax-exempt
100+ Employees
Tax-exempt
Tax-paying
Commercial Research Laboratories
Tax-paying
0-19 Employees
20-99 Employees
100+ Employees
Tax-exempt
Outpatient Care Clinics
Physicians' clinics (amb. care)
Tax-paying
Tax-exempt
Freestanding kidney dialysis facilities
Tax-paying
Tax-exempt
Physicians' Offices
Dentists' Offices and Clinics
Offices
Clinics
Tax-paying
Tax-exempt
Medical & Dental Laboratories
Medical
Dental
Freestanding Blood Banks
Funeral Homes
Fire & Rescue
Corrections
Federal Government
State Government
Local Government
Medical Waste
Per Facility
(tons)
9.75
17.10
52.08
167.28
0.14
0.17
1.14
1.04
2.70
3.44
0.28
2.19
24.50
7.28
2.26
4.19
1.62
2.31
0.18
0.08
0.14
0.19
1.63
0.51
22.48
0.04
0.05
1.64
1.70
0.34
Incremental Annual Cost Per Facility
Low1
S123
$216
$657
$2,111
$2
$2
$14
$13
$34
$43
$4
$28
$309
$92
$29
$53
$20
$29
$2
$1
$2
$2
$21
$6 '
$284
$1
$1
$21
$21
$4
High1
$490
$859
$2,616
$8,404
$7
$9
$57
$52
$135
$173
$14
$110
$1,231
$366
$113
$210
$81
$116
$9
$4
$7
$10
$82
$26
$1,129
$2
S3
$82
$85
$17
1 Based on $0.006 per pound, the average armualized control cost for all commercial MWIs.
2 Based on $0.025 per pound, the armualized control cost for a large model commercial MWI that is uncontrolled in the baseline.
30
-------
Table 11
MWI Operators: Model Facilities
(Year =1993)
Industry/Model Facility
Short-term hospitals, excluding psychiatric:
Federal government
Small
Medium
Large
State government
Small
Medium
Large
Local government
Small
Medium
Large
Not-for-profit
Small
Medium
Large
For-profit
Small
Medium
Large
Psychiatric hospitals, short-term and long-term
Small
Medium
Large
Nursing homes
Tax-paying
Tax-exempt
Commercial research laboratories
Tax-paying
Tax-exempt
Commercial incineration facilities
Employment1
393
674
1,738
133
617
2,753
112
432
1,987
139
522
1,725
112
399
1,156
87
259
719
150
150
200
200
N/A
Annual
Revenue/Budget2
$18.7
$43.2
$117.0
$8.7
$41.3
$207.3
$5.6
$27.1
$155.0
$8.3
$36.8
$134.6
$7.3
$34.7
$106.7
$5.3
$15.1
$32.6
$4.9
$4.8
$21.2
$21.2
$0.5-8.7
1 For hospitals, full-time-equivalent
2 Millions of dollars
N/A - not available
31
-------
Table 12
Hospitals: Financial/Economic Inputs
(Year =1993)
Short-term hospitals.
excluding psychiatric:
r eden] govcjiuiiciit
6-24 Beds
25-49 Beds
50-99 Beds
100-199 Beds
200-299 Beds
300-399 Beds
400-499 Beds
500+ Beds
State government
6-24 Beds
25-49 Beds
50-99 Beds
100-199 Beds
200-299 Beds
300-399 Beds
400-499 Beds
500+ Beds
Local government
6-24 Beds
25-49 Beds
50-99 Beds
100-199 Beds
200-299 Beds
300-399 Beds
400-499 Beds
500+ Beds
Not-for-profit
6-24 Beds
25-49 Beds
50-99 Beds
100-199 Beds
200-299 Beds
300-399 Beds
400-499 Beds
500+ Beds
For-profit
6-24 Beds
25-49 Beds
50-99 Beds
100-199 Beds
200-299 Beds
300-399 Beds
400-499 Beds
500+ Beds
Psychiatric hospital*, short-
term and long-term
6-24 Beds
25-49 Beds
50-99 Beds
100-199 Beds
200-299 Beds
300-399 Beds
400-499 Beds
500+ Beds
Industry Totals
Number of
Facilities
31
61
22
56
32
26
16
46
3
20
10
17
8
11
10
17
129
408
370
242
73
36
14
42
92
398
608
795
555
328
169
218
10
76
201
288
95
27
12
8
18
84
303
156
58
39
30
72
Number of Beds
528
2.122
1,456
8,122
7,975
9,188
7,156
35321
49
686
693
2,332
1,982
3,925
4,413
10,868
2,451
15,012
25,689
33,472
18,331
12.279
6,400
31,516
1,748
15.148
44,407
114,670
136.231
113,066
75,385
150,905
186
3,097
14,756
39,443
22,535
9,203
5,191
4.553
430
3.166
22,131
20,477
14,714
13,821
13,697
56.949
Employment'
9,023
22,230
11,796
38,291
36,581
39,010
31,672
100,372
133
2.326
i2!8
10,327
7,961
23,720
33,243
61,888
6,418
42,095
72,360
102,518
73,667
59,058
32,525
149,207
6,475
52,895
142,944
429,112
551,960
481.106
327,941
720,101
553
8,633
42,217
111,940
68,204
26,404
15.051
16,281
1,345
7,073
39,192
37.091
30.928
26.319
23,191
99,680
Average Per Facility
Number of Beds
170
348
662
1450
2492
3534
4473
7678
163
343
693
1372
247.8
356.8
441 3
6393
190
368
694
1383
251 1
341.1
4571
7504
190
381
73.0
1442
2455
3447
4461
6922
186
40.8
734
137.0
2372
340.9
4326
569.1
239
377
730
131.3
253.7
354.4
4566
7910
Employment
291 1
3644
5362
6838
1.143.2
1,5004
1,9795
2,1820
443
1163
221.8
607.5
995.1
2,156.4
3,324.3
3,6405
498
1032
1956
4236
1,0091
1,6405
2,323.2
3,552 5
704
132.9
2351
5398
9945
1,4668
1.9405
3.303 2
55.3
1136
2100
3887
7179
9779
1,254.3
2,035.1
747
84.2
129.3
237.8
533.2
674.8
773.0
1,3844
Annual Revenue
(millions $)
86
165
296
442
748
1041
1301
1576
35
75
15 1
403
796
1715
241.5
3067
24
50
108
263
775
1245
1845
2781
38
7.9
15.0
38.2
732
113.2
1524
2770
4.3
7.4
163
337
66.8
961
112.6
1957
43
51
8.5
14.3
258
306
350
64.0
'Full-time equivalent
32
-------
Table 13
Other MWI Operators: Financial/Economic Inputs
(Year = 1993)
Other MWI Operators
Nursing homes
Tax-paying
100+ employees
Tax-exempt
50-99 employees
100+ employees
Commercial research
laboratories
Tax-paying
50-99 employees
100+ employees
Tax-exempt
Average Employment Per
Facility
148.2
74.3
189.3
68.3
469.7
139.5
Average Revenue Per
Facility
$4,846,944
$2,063,489
$6,210,832
$7,299,521
$49,670,443
14,761,754
N/A - not available
33
-------
Incremental annual costs for off-site generators are presented in Table 10. The costs reflect two
alternative estimates of the increase in the cost of off-site incineration. The low estimate is 0.63
cents per pound, the average annualized control cost for all commercial MWIs. The high estimate
derives from an uncontrolled large model commercial MWI estimated to have annualized control
costs of $193,694 and to burn 7,711,000 pounds of medical waste annually. Dividing cost by
throughput yields a cost of 2.51 cents per pound. The use of low and high cost estimates allows
for the consideration of uncertainty in the actual incremental cost that off-site generators will face.
2. Financial and Economic Inputs
Model information for facilities that operate on-site MWIs (i.e., MWI operators) is presented in
Table 11. The information derives from the financial and economic input data in Tables 12 and
13. Interpolation was used to assign employment and revenue to the model hospitals of bed sizes
40 (small), 140 (medium), and 400 (large), and to assign revenue to the model nursing homes
with 150 employees and model research labs with 200 employees. For example, in Table 12 it is
seen that the average number of beds at a Federal government hospital is 34.8 in the 25-49 beds
category and 66.2 in the 50-99 beds category. The model small hospital has 40 beds, however.
Interpolating between average revenue of $16.5 million for a Federal hospital with 34.8 beds and
$29.6 million for a Federal hospital with 66.2 beds, revenue of $18.7 million for the model small
hospital, shown in Table 11, is obtained.
3. Model Facility Impacts
The facility-specific price increase is defined as the price increase necessary for an individual
facility to fully recover control costs. It is calculated as the ratio of model facility annualized
control costs to annual revenue. This provides an indication of the impact of the regulation on
"typical" facilities in each industry. This calculation is then compared to the market price increase
(i.e., the average industry-wide price increase). To the extent that an industry is competitive,
individual firms are constrained to institute price increases that do not significantly exceed the
market price increase. For all but commercial MWIs, the analysis assumes that the facility-
specific price increase may not be achievable if it exceeds the market price increase by more than
one percentage point. For commercial MWIs, it is assumed that the facility-specific price increase
may not be achievable if it exceeds the market price increase by more than two percentage points.
More pricing latitude is given to commercial MWI operators for two reasons: 1) commercial
incineration is not subject to the same institutional pricing constraints as the health care sector,
and 2) commercial incineration fees could actually get a boost from the regulation as a result of
switching from on-site incineration and an increase in the demand for commercial incineration
services.
The price increases necessary for model facilities to recover annualized control costs under
scenario A, no switching, are shown in Table 14A. For all but commercial incineration facilities,
these price increases are considered achievable if they do not exceed the market price increase
(see Table 5 A) by more than one percentage point. Where the difference is more than one
percentage point (e.g., small urban local government hospitals under regulatory options two
34
-------
Table 14A
Price Impacts for Model Facilities Operating On-stte MWIs: Existing Sources
Scenario A: No Switching
Model Facility
Short-term hospitals, excluding psychiatric:
Federal government
Small
Urban and rural, not remote or z 2,000 lbs./week
Rural, remote and <2,000 Ibs./week
Medium
Large
State government
Small
Urban and rural, not remote or z 2,000 lbs./week
Rural, remote and <2,000 Ibs./week
Medium
Large
Local government
Small
Urban and rural, not remote or z 2,000 lbs,/week
Rural, remote and <2,000 IbsJweek
Medium
Large
Not-for-profit
Small
Urban and rural, not remote or z 2,000 lbs./week
Rural, remote and <2,000 Ibs./week
Medium
Large
For-profit
Small
Urban and rural, not remote or z 2,000 lbs./week
Rural, remote and <2,000 lbs./week
Medium
Large
Psychiatric hospitals, short-term and long-term
Small
Urban and rural, not remote or 22,000 Ibs./week
Rural, remote and <2,000 lbs./week
Medium
Large
Nursing homes
Tax-paying
Urban and rural, not remote or z 2,000 lbs./week
Rural, remote and <2,000 Ibs./week
Tax-exempt
Urban and rural, not remote or 22,000 lbs./week
Rural, remote and <2,000 IbsTweek
Commercial research labs
Tax-paying
Tax-exempt
Commercial incineration facilities*
Annualized Control Costs us * Percent of Revenue/Budget
Regu-
latory
Option 1
0.11
0.11
0.20
0.13
0.23
0.23
0.21
0.07
0.36
0.36
0.32
0.10
0.25
0.25
0.24
0.11
0.28
0.28
0.25
0.14
0.38
0.38
0.58
0.47
0.41
0.41
0.42
0.42
0.41
0.41
0-18.36
Regu-
latory
Option 2
0.38
0.11
0.20
0.13
0.82
0.23
0.21
0.07
1.27
0.36
0.32
0.10
0.86
0.25
0.24
0.11
0.97
0.28
0.25
0.14
1.34
0.38
0.58
0.47
1.45
0.41
1.49
0.42
0.41
0.41
0-18.36
Regu-
latory
Option 3
0.38
0.38
0.20
0.13
0.82
0.82
0.21
0.07
1.27
1.27
0.32
0.10
0.86
0.86
0.24
0.11
0.97
0.97
0.25
0.14
1.34
1.34
0.58
0.47
1.45
1.45
1.49
1.49
0.41
0.41
0-18.36
Regu-
latory
Option 4
0.42
0.42
0.20
0.13
0.89
0.89
0.21
0.07
1.39
1.39
0.32
0.10
0.94
0.94
0.24
0.11
1.06
1.06
0.25
0.14
1.46
1.46
0.58
0.47
1.59
1.59
1.62
1.62
0.47
0.47
0-18.36
Regu-
latory
OpttonS
0.42
0.42
0.23
0.13
0.89
0.89
0.24
0.07
1.39
1.39
0.36
0.10
0.94
0.94
0.27
0.11
1.06
1.06
0.28
0.14
1.46
1.46
0.66
0.47
1.59
1.59
1.62
1.62
0.47
0.47
0-20.69
Regu-
latory
Option 6
0.47
0.47
0.23
0.13
1.01
1.01
0.24
0.07
1.57
1.57
0.36
0.10
1.06
1.06
0.27
0.11
1.20
1.20
0.28
0.14
1.65
1.65
0.66
0.47
1.79
1.79
1.83
1.83
0.47
0.47
0-20.69
* This is the range of impacts for all 59 facilities operating commercial MWIs. Only three facilities have cost to revenue/budget ratios exceeding the
industry average of 4.6%.
35
-------
Table 14B
Price Impacts of Switching for Model Facilities Operating On-site MWIs: Eristing Sources - Scenarios Band C
Model Facility
Short-term hospitals, excluding psychiatric:
Federal government
Small - Urban
Rural1
Medium - Urban
Rural
Large - Urban
Rural
State government
Small - Urban
Rural1
Medium - Urban
Rural
Large - Urban
Rural
Local government
Small - Urban
Rural1
Medium - Urban
Rural
Large - Urban
Rural
Not-for-profit
Small - Urban
Rural1
Medium - Urban
Rural
Large - Urban
Rural
For-profit
Small - Urban
Rural1
Medium - Urban
Rural
Large - Urban
Rural
Psychiatric hospitals, short-term and long-term
Small - Urban
Rural1
Medium -Urban
Rural
Large - Urban
Rural
Nursing homes: Tax-paying - Urban
Rural1
Tax-exempt- Urban
Rural1
Commercial research labs: Tax-paying - Urban
Rural
Tax-exempt- Urban
Rural
Annual Switching Costs as a Percent of Revenue/Budget
Scenario B - Switching With
Waste Segregation
0.03
0.04
0.05
0.06
0.08
0.11
0.06
0.08
0.05
0.07
0.05
0.06
0.09
0.13
0.07
0.10
0.06
0.08
0.06
0.09
0.05
0.08
0.07
0.10
0.07
0.10
0.06
0.08
0.09
0.12
0.10
0.14
0.13
0.19
0.29
0.40
0.11
0.15
0.11
0.15
0.09
0.13
0.09
0.13
Scenario C - Switching
Without Waste Segregation
0.10
0.17
0.17
0.27
0.29
0.47
0.22
0.36
0.18
0.29
0.16
0.27
0.34
0.56
0.27
0.44
0.22
0.36
0.23
0.38
0.20
0.32
0.25
0.41
0.26
0.43
0.21
0.34
0.32
0.52
0.36
0.59
0.48
0.78
1.05
1.70
0.39
0.64
0.40
0.65
0.34
0.56
0.34
0.56
Does not apply to facilities that are remote (i.e., more than 50 miles from an SMSA) and burn less than 2,000 pounds of medical waste per week.
36
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through six), Table 14B shows that the price increase necessary to recover annual switching costs,
whether under Scenario B or Scenario C, is achievable, in no case exceeding the market price
increase (see Tables 5B and 5C) by more than one percentage point. It can therefore be
concluded that where switching to an alternative method of medical waste disposal (e.g., off-site
incineration) is an option, the regulation does not have any significant price impacts. (The lower
price impacts in Table 14B compared to Table 14A also suggest - as is already incorporated into
scenarios B and C - that many facilities may find switching cost-attractive regardless of whether
the price impacts of installing controls are significant.)
Not all facilities have switching as an option, however. Recall that switching is assumed to not be
possible for up to 114 small rural MWIs that are located more than 50 miles away from an SMS A
("remote") and that burn less than 2,000 pounds of medical waste per week. Price impacts for
these facilities are distinguished in Table 14A. A comparison with Table 5 A reveals that the
facility-specific price increase never exceeds the market price increase by more than one
percentage point under regulatory options one and two. Therefore, none of these MWIs are
significantly impacted under regulatory options one and two.
Under regulatory options three through six, on the other hand, the facility-specific price increase
exceeds the market price increase by more than one percentage point for these up to 114 small,
rural, remote MWIs in the following instances: local government hospitals under regulatory
options three through six, not-for-profit hospitals under regulatory option six, for-profit hospitals
under regulatory options four through six, psychiatric hospitals under regulatory options three
through six, and both tax-paying and tax-exempt nursing homes under regulatory options three
through six. In the original EIA, the ratio of annualized control costs to before-tax net income -
indicating the percent reduction in before-tax net income if control costs are fully absorbed - was
calculated. Repeating this calculation for the above cases of small rural MWIs (using earnings
data updated to 1993), impacts ranging from 15.95 percent for for-profit hospitals under
regulatory options four and five to 52.33 percent for tax-exempt nursing homes under regulatory
option six were found. All of these impacts can be considered significant. In the long run, some
of these facilities might have to shut down, or at least terminate their operations that generate
medical waste (which might be tantamount to shutting down).
Therefore, under regulatory options three through six, some of the up to 114 small rural MWIs
that are located more than 50 miles away from an SMSA and burn less than 2,000 pounds of
medical waste per week - and are therefore assumed to not be able to switch to an alternative
medical waste disposal method - are significantly impacted. The exact number is not known, but
other than knowing that it could be up to 114, it can also be concluded that the number would
increase as the control requirements increase in stringency from regulatory option three to
regulatory option six.
Switching may also not be an option for commercial MWIs. (While commercial autoclaving can
treat medical waste, it may not be a viable switching option for all commercial MWI operators.)
Table 14A shows that the facility-specific price impact for commercial MWIs ranges from 0 to
37
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18.36 percent under regulatory options one through four and from 0 to 20.69 percent under
regulatory options five and six. These ranges reflect the varying levels of baseline control among
the 59 facilities operating the 79 commercial MWIs in the MWI inventory. While some of the 79
commercial MWIs already meet the requirements of the EG and therefore have no control costs,
others are "uncontrolled" in the baseline and therefore have relatively high control costs.
However, only three commercial MWI facilities - out of the total of 59 - have price impacts
exceeding the market price increase (2.62 percent under regulatory options one through four,
2.63 percent under regulatory options five and six) by more than two percentage points (i.e.,
above 4.6%). All of these facilities are completely uncontrolled in the baseline. One has a price
impact of 9.58 percent under all six regulatory options, another has a price impact of 11.13
percent under all six regulatory options, and the third has a price impact of 18.36 percent under
regulatory options one through four and 20.69 percent under regulatory options five and six.
These price impacts deviate significantly from the market price increase and therefore may not be
achievable. Current excess capacity in the commercial incineration industry further suggests that
they may not be achievable. The impacts on these three commercial MWI facilities of absorbing
all or a portion of control costs cannot be estimated due to a lack of information on baseline
profitability. However, in all three cases, judging from the magnitude of control costs in relation
to revenue, the impact of absorbing any significant portion of control costs is liable to be
prohibitive. In all three cases, therefore, closure may result if switching to an alternative
commercial treatment technology (e.g., autoclaving) is not possible.
There are a couple of mitigating factors. First, one benefit that commercial MWI operators will
derive from the regulation will be an increase in demand for their service. Table 14B presents
impact information under the assumption that some facilities with on-site MWIs will choose to
switch to a lower-cost alternative for medical waste treatment and disposal rather than install
emission control equipment to meet the requirements of the regulation. In many cases this lower-
cost option will be commercial incineration. As a result, the demand for commercial incineration
should increase as a result of the regulation. Lack of relevant financial data prevents
quantification of the economic effects of this increase in demand. However, it should be
recognized that increased revenues from the increase in demand could make it a little easier for
uncontrolled commercial MWI facilities to absorb their control costs.
Second, it is possible that because they are uncontrolled, the three significantly impacted
commercial MWI facilities currently enjoy a cost advantage over their competitors. If so, the
control costs would not necessarily make these facilities unviable, but rather would eliminate their
current excess profits and would "level the playing field."
Price impacts for model facilities that do not operate an MWI (off-site generators) are shown in
Table 15. These facilities represent the vast majority of medical waste generators. All impacts
are very small and are not considered significant.
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Table IS
Price Impacts for Model Facilities Not Operating On-slte MWIs: Editing Sources
Industry/Model Facility
Hospitals
<50Beds
50-99 Beds
100-299 Beds
300+ Beds
Nursing Homes
0-19 Employees
Tax-paying
Tax-exempt
20-99 Employees
Tax-paying
Tax-exempt
100+ Employees
Tax-exempt
Tax-paying
Commercial Research Laboratories
Tax-paying
0-19 Employees
20-99 Employees
100+ Employees
Tax-exempt
Outpatient Care
Physicians' clinics (amb. care)
Tax-paying
Tax-exempt
Freestanding kidney dialysis facilities
Tax-paying
Tax-exempt
Physician' Offices
Dentists' Offices and Clinics
Offices
Clinics
Tax-paying
Tax-exempt
Medical & Dental Laboratories
Medical
Dental
Freestanding Blood Banks
Funeral Homes
Fire & Rescue
Corrections
Federal government
State government
Local government
Incremental Annual Cost as a Percent of Revenue/Budget
Low1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
High*
0.01
0.01
0.01
0.01
0
0
0
0
0
0
0
0
0
0
0
0
0
0.01
0
0
0
0
0.01
0.01
0.02
0
0
0
0
0
1 Based on $0.006 per pound, the average annualized control cost for all commercial MWIs.
2 Based on S0.02S per pound, the annualized control cost for a large model commercial MWI that is uncontrolled in the baseline.
39
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This economic impact analysis has examined industries that are directly impacted by the
regulation, namely industries that generate or treat medical waste. Secondary impacts such as
those on air pollution device vendors and MWI vendors were not evaluated due to data
limitations. However, it can be said that air pollution device vendors are expected to experience
an increase in demand for their products due to the regulation. The regulation is also expected to
increase the demand for commercial MWI services. Due to economies of scale, however, there is
likely to be a demand shift from smaller incinerators to larger incinerators. Therefore, vendors of
small MWIs may be adversely affected by the regulation. Lack of data on the above effects
prevents quantification of economic impacts on these secondary sectors.
V. Small Entity Impacts
In accordance with the Regulatory Flexibility Act of 1980 and its amendment in 1996 by the Small
Business Regulatory Enforcement Fairness Act (SBREFA), it is necessary to determine if the EG
will have a "significant impact on a substantial number of small entities."4 As demonstrated
below, the EG are determined not to have a significant economic impact on a substantial number
of small entities under any regulatory option.
Three types of small "entities" are impacted by the regulation: small businesses, small nonprofit
organizations, and small governmental jurisdictions. Examples of impacted businesses include
for-profit hospitals and tax-paying nursing homes. Examples of impacted nonprofit organizations
include not-for-profit hospitals and, in many cases, tax-exempt nursing homes. Examples of
impacted governmental jurisdictions include those (e.g., municipalities, counties, states) that
operate hospitals and probably some tax-exempt nursing homes.
The EG will impact most facilities that generate medical waste - not only MWI operators, but
also facilities that send their medical waste off-site to be incinerated. MWI operators are directly
impacted by having to meet the control requirements of the regulation while "off-site generators"
face the likelihood of higher fees for commercial incineration. Off-site generators represent the
vast majority of facilities impacted by the regulation. While perhaps half of all hospitals operate
on-site MWIs, the great majority of nursing homes and research labs do not. Moreover, the
following industries were defined to exist exclusively of facilities that do not operate on-site
MWIs: medical and dental labs, outpatient care, physicians' offices, dentists' offices and clinics,
blood banks, funeral homes, fire and rescue operations, and correctional facilities. Table 15
shows that economic impacts on facilities that have to pay more for commercial incineration are
insignificant. The increase in fees could be recovered with a price increase of, at the most, only
0.02 percent (freestanding blood banks).
It remains, therefore, to look at MWI operators. Four industries have been defined as including
MWI operators: hospitals, nursing homes, research labs, and commercial incineration. The U.S.
Small Business Administration (SB A) definition of a small business for hospitals, nursing homes,
40
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and commercial MWI operators is $5 million or less in annual revenue averaged over the past
three years. For research labs, the SB A definition is 500 employees or fewer.5 A nonprofit
organization is considered "small" if it is "independently owned and operated and not dominant in
its field." A governmental jurisdiction is considered "small" if its population is 50,000 or less.6
It has been seen in this revised EIA that - due to the widespread opportunity to switch to an
alternative method of medical waste treatment and disposal - the economic impacts of the EG on
MWI operators of all sizes are generally not significant. In general, the cost of controls or the
cost of switching can be recovered with a price increase that does not significantly exceed the
market price increase. This holds for small businesses, small nonprofit organizations, and, by
implication, small governmental jurisdictions (if a government facility is not significantly impacted,
it can be assumed that the jurisdiction is not significantly impacted).
There are two exceptions. Significant economic impacts were found 1) under all six regulatory
options for three commercial MWI facilities, and 2) under regulatory options three through six for
some of the up to 114 small, rural, remote MWIs (defined as located more than 50 miles away
from an SMS A and burning less than 2,000 pounds of medical waste-per week) that are assumed
to not have switching opportunities.
The significant impacts found in the EIA for three commercial MWI facilities were represented by
price increases of 9.6 percent, 11.1 percent, and 18.4 percent under regulatory options one
through four (against a market price increase of 2.62%), and 9.6 percent, 11.1 percent, and 20.7
percent, respectively, under regulatory options five and six (against a market price increase of
2.63%). Estimating revenue for commercial MWIs by assigning, conservatively, a rate of 24
cents per pound to throughput, only one of the significantly impacted facilities - the facility
requiring an 11.1 percent price increase - is found to be affiliated with an entity (e.g., firm,
governmental jurisdiction) with medical waste incineration revenues of $5 million or less.
Therefore, at the most, only one of the significantly impacted commercial MWI operators is
"small." This is not considered a "substantial number." (Note: An examination of the
commercial MWIs in the MWI inventory suggests that of the 79, 51 are operated by 10 entities
with medical waste incineration revenues of more than $5 million. The other 28 MWIs are
operated by 22 entities that are potentially "small." However, as explained above, at the most
only one of these 22 potentially small entities is "significantly impacted.")
The EIA also found significant economic impacts in some cases under regulatory options three
through six for the up to 114 rural MWIs that are more than 50 miles away from an SMSA and
burn less than 2,000 pounds of medical waste per week. However, not all of these 114 MWIs are
significantly impacted. Moreover, at least some, and possibly a majority, are neither operated by a
small business or nonprofit organization nor under the jurisdiction of a small government.
To wit, the small intermittent MWI for which significant impacts were found was assigned to
hospitals with 40 beds and nursing homes with 150 employees. Table 11 showed that hospitals
with 40 beds have average revenue ranging from $5.3 million (psychiatric hospitals) to $18.7
41
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million (Federal hospitals). This exceeds the threshold for a small hospital, $5.0 million,
suggesting that most hospitals operating a small MWI are not "small." Average revenue for
nursing homes in Table 11 is $4.8-4.9 million, just below the $5.0 million small-business cutoff.
Many nursing homes operating a small MWI - perhaps close to half- are therefore not "small."
Furthermore, the majority of MWIs are not operated by a public, or government, facility,
suggesting that fewer than half of the up to 114 small, rural, remote MWIs are under the
jurisdiction of a small government. It is therefore concluded that at the most half, or 57, of the
114 small, rural, remote MWIs are potentially significantly impacted under regulatory options
three through six and are either operated by a small business or nonprofit organization or are
under the jurisdiction of a small government.
This number, up to 57, is not seen as "substantial," however. This is because it is small in relation
to the total number of small entities impacted by the regulation. The exact number of impacted
small businesses and nonprofit organizations is not known. Recall, however, that most facilities
generating medical waste - not only MWI operators, but also facilities sending their waste off-site
to be incinerated - are impacted by the regulation.
In Table 12, 660 hospitals are in bed-size categories with average revenue per facility of $5
million or less. More than half of these 660 hospitals are likely to be "small," with revenue under
$5 million. The number of "small" nursing homes is more overwhelming. Though not shown in
Table 13, there are 4,515 tax-paying nursing homes with 100+ employees (average revenue =
$4.8 million), 6,781 tax-paying nursing homes with 20-99 employees (avg. rev. = $1.8 million),
1,896 tax-exempt nursing homes with 20-99 employees (avg. rev. = $1.6 million), 2,440 tax-
paying nursing homes with 0-19 employees (avg. rev. = $0.3 million), and 1,926 tax-exempt
nursing homes with 0-19 employees (avg. rev. = $0.3 million). Clearly, the number of
significantly impacted small businesses and nonprofit organizations is small in relation to the total
number that are impacted, both for hospitals and nursing homes.
The exact number of impacted small governmental jurisdictions is also not known. Consider,
however, that most townships and municipalities are "small:" in 1986, the 16,691 townships in the
U.S. had an average population of 3,119 and the 19,200 municipalities had an average population
of 7,805, both significantly below the population threshold for a small governmental jurisdiction,
50,000. In addition, many counties are small: in 1986, the 3,042 counties in the U.S. had an
average population of 71,465.
No doubt many - perhaps several thousand - small townships, municipalities, and counties are
impacted by the regulation because one or more medical waste generators who either operate an
on-site MWI or send their waste off-site to be incinerated are under their jurisdiction. Such
medical waste generators would have to be public, or government, facilities. Table 12 identifies
1,314 local government hospitals in the U.S. (in addition, 19 of the psychiatric hospitals are local-
government). Many of these "local government" jurisdictions may be small. More significantly,
there were 29,840 public fire departments in the U.S. in 1987. Many, if not most, are operated by
small governmental jurisdictions, particularly municipalities, considering that municipalities
42
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accounted for 75 percent of public spending on fire and rescue in 1986. Further, some of the
counties and municipalities that operate the 3,304 local jails in the U.S. (1990) are certain to be
"small."
With perhaps several thousand small governmental jurisdictions impacted by the regulation, the
number that are significantly impacted - up to 57 - is not seen as substantial.
Finally, it should be noted that in one important sense, the EG have differential impacts that
actually favor small entities. MWIs tend to be located at large facilities as opposed to small
facilities. (It takes certain economies of scale to be able to justify operating an on-site MWI.)
Tables 14A and 14B show that the price increase necessary for MWI operators to recover control
costs or switching costs ranges up to 1.83 percent (tax-exempt nursing homes; scenario A, no
switching; regulatory option six). In contrast, Table 15 shows that impacts on the generally
smaller facilities that send their medical waste off-site to be incinerated are minimal. The
estimated increase in the cost of off-site incineration, 0.6-2.5 cents per pound, could be recovered
with a price increase of, at the most, only 0.02 percent (freestanding blood banks).
43
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References
1. U.S. Environmental Protection Agency. Medical Waste Incinerators - Background
Information for Proposed Standards and Guidelines: Analysis of Economic Impacts for Existing
Sources. EPA-453/R-94-048a. July 1994.
2. U.S. Environmental Protection Agency. Addendum to Analysis of Economic Impacts for
Existing Sources. EPA-453/R-94-048a. July 1994.
3. "Cost Information for Existing MWI's." Memorandum submitted by Brian Strong, Midwest
Research Institute, to Linda Chappell, U.S. Environmental Protection Agency. March 17, 1997.
4. EPA SBREFA Task Force,"EPA Interim Guidance for Implementing the Small Business
Regulatory Enforcement Fairness Act and Related Provisions of the Regulatory Flexibility Act."
February 5, 1997.
5. Small Business Administration. "Small Business Size Standards." 13 Code of Federal
Register, Part 121. January 31, 1996 (Volume 61, Number 21).
6. Office of Regulatory Management and Evaluation. "EPA Guidelines for Implementing the
Regulatory Flexibility Act." April 1992.
44
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1. REPORT NO.
EPA-453/R-97-007b
TECHNICAL REPORT DATA
(Please read Instructions on reverse before completing)
2,
4. TITLE AND SUBTITLE
Hospital/Medical/Infectious Waste Incinerators: Background
Information for Promulgated Standards and Guidelines -
Analysis of Economic Impacts for Existing Sources
7. AUTHOR(S)
9. PERFORMING ORGANIZATION NAME AND ADDRESS
Air Quality Strategies and Standards Division (Mail Drop 15)
Office of Air Quality Planning and Standards
U.S. Environmental Protection Agency
Research Triangle Park, NC 2771 1
12. SPONSORING AGENCY NAME AND ADDRESS
Director
Office of Air Quality Planning and Standards
Office of Air and Radiation
U.S. Environmental Protection Agency
Research Triangle Park, NC 27711
3. RECIPIENT'S ACCESSION NO.
5. REPORT DATE
July 1997
6. PERFORMING ORGANIZATION CODE
8. PERFORMING ORGANIZATION REPORT NO.
10. PROGRAM ELEMENT NO.
11. CONTRACT/GRANT NO.
13. TYPE OF REPORT AND PERIOD COVERED
Final
14. SPONSORING AGENCY CODE
EPA/200/04
15. SUPPLEMENTARY NOTES
Published in conjunction with promulgated air emission standards and guidelines for
hospital/medical/infectious waste incinerators
16. ABSTRACT
The economic impact analysis uses annualized control costs in conjunction with economic and financial
parameters to estimate potential economic impacts that may be experienced by existing facilities in
industries that generate hospital waste or medical/infectious waste. Economic impacts such as price,
output, and employment changes are examined for industries such as hospitals, nursing homes, and
veterinary facilities.
17.
a. DESCRIPTORS
KEY WORDS AND DOCUMENT ANALYSIS
b. IDENTIFIERS/OPEN ENDED TERMS
Air Pollution Air Pollution Control
Pollution Control Solid Waste
Standards of Performance Medical Waste
Emission Guidelines Incineration
Medical Waste Incinerators Hospital Waste
Hospital/Medical/Infectious Waste Infectious Waste
Incinerators
18. DISTRIBUTION STATEMENT
Release Unlimited
19. SECURITY CLASS (Report)
Unclassified
20. SECURITY CLASS (Page)
Unclassified
c. COSATI Field/Group
21. NO. OF PAGES
44
22. PRICE
EPA Form 2220-1 (Rev. 4-77) PREVIOUS EDITION IS OBSOLETE
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