453R94047Q
United States
Environmental Protection
Agency
Office of Air Quality
Planning and Standards
Research Triangle Park. NC 27711
EPA-453/R-94-047a
July 1994
& EPA
Medical Waste Incinerators -
Background Information for
Proposed Standards and Guidelines:
Analysis of Economic Impacts
for New Sources
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EPA-453/R-94-047a
Medical Waste Incinerators-Background Information for Proposed
Standards and Guidelines: Analysis for Economic Impacts for New
Sources
July 1994
U. S. Environmental Protection Agency
Office of Air and Radiation
Office of Air Quality Planning and Standards
Research Triangle Park, North Carolina
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DISCLAIMER
This report is issued by the Emission Standards Division, Office
of Air Quality Planning and Standards, U. S. Environmental
Protection Agency. It presents technical data of interest to a
limited number of readers. Mention of trade names and 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 nonprofit 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
Se-vice, 5285 Port Royal Road, Springfield, Virginia 22161
( [ '03] 487-4650) .
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TABLE OF CONTENTS
Page
List of Tables .............................................
List of Figures ............................................
1.0 INTRODUCTION ..........................................
1.1 SCOPE ............................................ 3
1.2 ORGANIZATION ..................................... '
1 . 3 SUMMARY ..........................................
2 . 0 BACKGROUND ............................................ ?
2 . 1 MWI POPULATION ................................... *
2 . 2 CONTROL COSTS .................................... "
2 . 3 REGULATED INDUSTRIES ............................. "
2 . 4 MODEL FACILITIES ................................. £°
2.4.1 Hospitals ................................ *°
2.4.2 Nursing Homes ............................ *j»
2.4.3 Physicians' Offices ....... ............... **
2.4.4 Dentists' Offices and Clinics ............ 30
2.4.5 outpatient Care .......................... 31
2.4.6 Freestanding Blood Banks ................. ^
2.4.7 Veterinary Facilities .................... 33
2.4.8 Laboratories ............................. "
2.4.9 Funeral Homes ---- ........................ fb
2 . 4 . 10 Fire and Rescue .......................... 37
2.4.11 Corrections ................ :''.:' ......... I*
2.4.12 Commercial Incineration Facilities ....... 38
3.0 ECONOMIC IMPACTS ...................................... J?
3 . 1 METHODOLOGY AND OVERVIEW ......................... 3B
3 . 2 PRICE ELASTICITY OF DEMAND ....................... «
3.3 INSTITUTIONAL CONSIDERATIONS ..................... *'
3.3.1 Health Care Providers Paid in Part
by Third Parties ......................... 47
3.3.2 Public and Not-For-Prof it Establishments. 50
3 . 4 INDUSTRY-WIDE IMPACTS ............................ 52
3.4.1 Industry-wide Annualized Control Costs... 52
3.4.2 Financial/Economic Inputs ................ 57
3.4.3 Commercial Incineration .................. 59
3.4.4 Market Price Increase .................... 63
3.4.5 Consequences of the Market Price
Increase . ................................ 65
3.4.5.1 Output Impacts .................. 66
3.4.5.2 Employment and Revenue Impacts.. 69
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TABLE OF CONTENTS
(Continued)
page
3.5 PER-FACILITY IMPACTS FOR MWI OPERATORS 73
3.5.1 Linking Control Costs to Model
Facilities 73
3.5.2 Facility Price Increase 75
3.5.2.1 Hospitals 78
3.5.2.2 Other MWI Operators 82
3.5.3 Cost Absorption 84
3.5.3.1 Hospitals 87
3.5.3.2 Other MWI Operators 87
3.5.4 Capital Availability 88
3.5.4.1 Hospitals 94
3.5.4.2 Other MWI Operators 95
3.5.5 Substitution 95
3.6 PER-FACILITY IMPACTS FOR OFFSITE GENERATORS 119
3 . 7 IMPACTS ON MWI VENDORS 126
3 . 8 IMPACTS ON TAXPAYERS 127
3 . 9 IMPACTS ON SMALL ENTITIES 131
4 . 0 REFERENCES 137
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LIST OF TABLES
page
2
TABLE 1. CONTROL OPTIONS
TABLE 2. DISTRIBUTION OF NEW MWI SALES 10
TABLE 3. COMPARISON OF EXISTING AND NEW MWIs 13
TABLE 4. CONTROL COSTS FOR NEW MWIs (1989 DOLLARS) 15
TABLE 5 SUMMARY OF THE INCIDENCE OF NEW MWIs IN MAJOR
INDUSTRIES GENERATING MEDICAL WASTE 17
TABLE 6A. MODEL FACILITIES: HOSPITALS I9
TABLE 6B. MODEL FACILITIES: MWI OPERATORS OTHER THAN
HOSPITALS
TABLE 6C. MODEL FACILITIES: OFFSITE GENERATORS 22
TABLE 7. ELASTICITY ESTIMATES 44
TABLE 8A. CALCULATION OF NET INDUSTRY-WIDE ANNUALIZED
CONTROL COSTS: MINIMUM CONTROL COSTS FOR
EXISTING MWIs
TABLE 8B CALCULATION OF NET INDUSTRY-WIDE ANNUALIZED
TABLE 8B. £J|£|££ COSTS. MAXIMTJM CONTROL COSTS FOR
EXISTING MWIS
T*BLE 9. FINANCIAL/ECONOMIC INPUTS FOR THE INDUSTRY-WIDE
ECONOMIC IMPACT ANALYSIS =B
TABIF 10. NET INDUSTRY-WIDE ANNUALIZED CONTROL COSTS AS
A PERCENT OF REVENUE/BUDGET - 64
TABLE 11. INDUSTRY-WIDE OUTPUT IMPACTS OF THE MARKET
PRICE INCREASE 67
TABLE 12. INDUSTRY-WIDE EMPLOYMENT IMPACTS OF THE MARKET
PRICE INCREASE 70
TABLE 13. INDUSTRY-WIDE REVENUE/BUDGET IMPACTS OF THE
MARKET PRICE INCREASE 72
TABLE 14. CAPITAL CONTROL COSTS FOR MODEL FACILITIES
(1989 DOLLARS), "6
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LIST OF TABLES
(Continued)
Pace
TABLE 15. ANNUALIZED CONTROL COSTS FOR MODEL FACILITIES
(1989 DOLLARS) 77
TABLE 16A. PER-FACILITY ANNUALIZED CONTROL COSTS AS A
PERCENT OF REVENUE: HOSPITALS 79
TABLE 16B. PER-FACILITY ANNUALIZED CONTROL COSTS AS A
PERCENT OF REVENUE/BUDGET: MWI OPERATORS OTHER
THAN HOSPITALS 80
TABLE 17A. PER-FACILITY ANNUALIZED CONTROL COSTS AS A
PERCENT OF NET INCOME: HOSPITALS 85
TABLE 17B. PER-FACILITY ANNUALIZED CONTROL COSTS AS A
PERCENT OF BEFORE-TAX NET INCOME: MWI
OPERATORS OTHER THAN HOSPITALS 86
TABLE ISA, PER-FACILITY CAPITAL CONTROL COSTS AS A
PERCENT OF NET INCOME: HOSPITALS 89
TABLE 18B. PER-FACILITY CAPITAL CONTROL COSTS AS A
PERCENT OF BEFORE-TAX NET INCOME: MWI
OPERATORS OTHER THAN HOSPITALS 90
TABLE 19A. PER-FACILITY CAPITAL CONTROL COSTS AS A
PERCENT OF TOTAL LIABILITIES: HOSPITALS 91
TABLE 19B, PER-FACILITY CAPITAL CONTROL COSTS AS A
PERCENT OF TOTAL LIABILITIES: MWI OPERATORS
OTHER THAN HOSPITALS 92
TABLE 20A, COMPARATIVE ANNUAL PER-TON COSTS OF ONSITE
MEDICAL WASTE INCINERATION AND ALTERNATIVE
TREATMENT METHODS: BASELINE AND CONTROL
OPTION 2 99
TABLE 2OB. COMPARATIVE ANNUAL PER-TON COSTS OF ONSITE
MEDICAL WASTE INCINERATION AND ALTERNATIVE
TREATMENT METHODS: BASELINE AND CONTROL
OPTION 3 100
TABLE 20C. COMPARATIVE ANNUAL PER-TON COSTS OF ONSITE
MEDICAL WASTE INCINERATION AND ALTERNATIVE
TREATMENT METHODS: BASELINE AND CONTROL
OPTION 4 101
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LIST OF TABLES
(Continued)
Page
TABLE 21. COMPARATIVE CAPITAL COSTS OF A NEW MWI AND
A NEW AUTOCLAVE SYSTEM 105
TABLE 22. INPUTS FOR PER-FACILITY SUBSTITUTION ANALYSIS 109
TABLE 23. PER-FACILITY ANNUALIZED SUBSTITUTION COSTS AS
A PERCENT OF REVENUE (ONLY FOR CASES IN WHICH
SUBSTITUTION IS NECESSARY)
TABLE 24. PER-FACILITY ANNUALIZED SUBSTITUTION COSTS AS
A PERCENT OF NET INCOME (ONLY FOR CASES IN
WHICH SUBSTITUTION IS NECESSARY)
TABLE 25. ESTIMATED INCREMENTAL ANNUAL COSTS FOR
FACILITIES THAT SEND ALL OF THEIR MEDICAL
WASTE OFFSITE TO BE INCINERATED 122
TABLE 26. PER-FACILITY ANNUALIZED CONTROL COSTS AS A
PERCENT OF REVENUE/BUDGET: OFFSITE GENERATORS...124
TABLE 27. PER-FACILITY ANNUALIZED CONTROL COSTS AS A
PERCENT OF BEFORE-TAX NET INCOME: OFFSITE
GENERATORS 125
TABLE 28. PER-CAPITA IMPACTS OF ANNUAL COSTS TO PUBLIC
FACILITIES 129
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LIST OF FIGURES
Page
FIGURE 1. ECONOMIC IMPACT ANALYSIS METHODOLOGY (FOR
FACILITIES WITH AN ONSITE MWI) 39
FIGURE 2. THE EFFECTS OF INADEQUATE REIMBURSEMENT (e.g.,
FROM MEDICARE) OF INCREASED COSTS TO HEALTH
CARE PROVIDERS 49
FIGURE 3. ALTERNATIVE QUANTITY IMPACTS FOR COMMERCIAL
INCINERATION FACILITIES 60
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ANALYSIS OF ECONOMIC IMPACTS FOR NEW SOURCES
1.0 INTRODUCTION
1.1 SCOPE
In this report, the economic impacts of the New Source
Performance Standards (NSPS) for medical waste incinerators
(MWIs) are evaluated. The analysis is conducted by
comparing control costs to economic and financial parameters
of the regulated industries. Impacts are assessed for three
control options defined in Section 2.2'of the "Model Plant
Description and Cost Report."1 These control options are
specified as Control Options 2, 3, and 4 in Table 1.
Control Option 1, which consists of a secondary chamber with
a minimum gas residence time of 1 second at a minimum
temperature of 1,700° F, is also listed in Table 1.
However, it is not evaluated in the current report because
new MWIs are controlled at this level in the baseline. It
is evaluated, on the other hand, in the report on the
economic impacts of the Section lll(d) Emission Guidelines
on existing sources ("Analysis of Economic Impacts for
Existing Sources"), which are not controlled at this level
in the baseline.2 Control Option 2 consists of a secondary
chamber with a minimum gas residence time of 2 seconds at a
minimum temperature of 1,800° F. Control Option 3 consists
of a venturi scrubber/packed bed system and two-second
combustion. Control Option 4 consists of a dry injection/
fabric filter system with carbon and two-second combustion.
Two variants of the latter option — without carbon and with
some carbon — are also presented in the Model Plant
Description and Cost Report. Control costs for these
variants are slightly lower than under Control Option
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TABLE 1. CONTROL OPTIONS
Control Option
(C.O.) Description
1* One-second combustion
2 Two-second combustion
Venturi scrubber/packed bed system and
two-second combustion
4 Dry injection/fabric filter system with
carbon and two-second combustion
*Applies only to existing sources. Does not apply to new
sources because they are controlled at this level in the
baseline.
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4 in order to avoid a proliferation of calculations, the
variants are not assessed in the current report. Instead,
they are conservatively represented by Control Option 4.
The report seeks mainly to determine 1) the average
industry-wide price increase necessary to recover control
costs; 2) the market response to the industry-wide price
increase — specifically, impacts on output, employment,
revenue, and market structure; 3) the extent to which
individual establishments can recover control costs by
increasing prices; 4) the availability of capital to finance
the investment in controls; 5) the extent of economic
hardship if control costs cannot be fully recovered or if
capital is not readily available; and 6) the extent to which
the impacts of control costs can be, and will be, avoided by
switching to an alternative medical waste treatment and
disposal method. In addition to establishments that will
operate a new MWI, impacts are assessed for establishments
that generate medical waste and send it offsite to be
incinerated. This recognizes that such establishments will
likely pay higher fees for commercial incineration as a
result of the NSPS. An analysis of the potential for
significant impacts on small entities (e.g., small
businesses) is included.
1.2 ORGANIZATION
In Section 1.3, which follows, the findings of the
economic impact analysis are summarized. Background
information is provided in Section 2.0. This includes
information on the population of new MWIs (Section 2.1),
control costs (Section 2.2), the regulated industries
(Section 2.3), and model facilities (Section 2.4). Model
facilities and their parameters are presented in Tables 6A,
6B, and 6C. Economic impacts are assessed in Section 3.0.
In Section 3.1, the general methodology of the economic
impact analysis is outlined and an overview of the findings
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is presented. The price elasticity of demand — a measure
of the sensitivity of market demand to the price level — is
discussed in Section 3.2. Institutional constraints to
increasing prices (in an attempt to recover control costs)
are addressed in Section 3.3. In Section 3.4, industry-wide
(as opposed to per-facility) impacts are calculated and
evaluated. This includes a discussion of impacts on the
commercial incineration industry (Section 3.4.3). Per-
facility impacts are calculated and assessed for MWI
operators in Section 3.5 and for facilities that send their
medical waste offsite to be incinerated in Section 3.6.
Section 3.5 includes an analysis of the potential to avoid
control costs by switching from onsite incineration to an
alternative medical waste treatment and disposal method
(Section 3.5.5). Impacts on MWI vendors are discussed in
Section 3.7. In Section 3.8, impacts on taxpayers are
evaluated. In Section 3.9, the potential for significant
impacts on small entities is assessed. References are
provided in Section 4.0.
1.3 SUMMARY
No average industry-wide price increase necessary to
recover control costs ("market price increase") exceeds one
percent under any of the control options evaluated in this
report for the NSPS — Control Options 2, 3, and 4. All
market price increases are therefore considered to be
achievable.
Owing to a small market price increase and/or
relatively inelastic demand, all impacts on industry-wide
output, employment, and revenue are also insignificant.
This implies that no medical waste-generating industry will
need to be significantly restructured (e.g., through
closures or consolidations).
Individual facilities could be significantly impacted
by the NSPS, however. For MWI operators in the following
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cases, annualized control costs may not be fully recoverable
with a price increase and the resulting impact on earnings
may not be sustainable, and/or capital to finance the
investment in pollution controls may not be readily
available:
Hospitals with fewer than 50 beds under Control
Options 3 and 4
Hospitals with 50-99 beds under Control Option 4
Certain categories of hospitals with 100+ beds
(totaling only 16 facilities nationwide) under
Control Option 4
Nursing homes with 100+ employees under Control
Options 3 and 4
Veterinary facilities with 10-19 employees under
Control Options 3 and 4
Veterinary facilities with 20+ employees under
Control Option 4
Tax-paying commercial research labs with 20-99
employees under Control Options 3 and 4
Tax-exempt commercial research labs under Control
Option 4
In these cases, onsite incineration may have to be
terminated (or plans to invest in a new MWI may have to be
canceled). In this event, substitution (i.e., switching
from onsite incineration to an alternative medical waste
treatment method) would be necessary in order to avoid
closure — or at least to avoid the termination of
operations that result in, or are dependent on, the
generation of medical waste. The two most common
alternatives to onsite incineration for the treatment of
medical waste are offsite contract disposal (most commonly
offsite incineration) and onsite autoclaving.
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In general, switching from onsite incineration to one
or the other of these alternatives is feasible. For all but
two model combustors, there are incremental costs associated
with substituting. This is because the costs of the
alternative treatment methods are greater on average than
the cost of onsite incineration in the baseline. In many
cases, incremental substitution costs can be recovered with
a price increase. If not, it will, in general, be possible
to absorb the costs without compromising competitive
position. This is consistent with the fact that in all
industries in which aedical waste is generated, the majority
of facilities already utilize an alternative to onsite
incineration.
However, depending on particular conditions in
individual market segments, there may, under Control Options
3 and 4, be a few exceptions in which a facility for which
annualized control costs or capital control costs are
prohibitive would have to shut down. Closure would require
that the facility generates a substantial proportion and/or
quantity of pathological waste, for which substitution
options are limited because it cannot be autoclaved. In
addition, the facility would either have to face substantial
competition from other MVJI operators that are not forced to
substitute, or have to pay significantly more than average
for offsite contract disposal (because, for example, it is
remote from a treatment facility).
In addition to being necessary in some cases in order
to avoid closure, substitution will also offer the
opportunity in some cases to save costs. This is because
relative to the costs of alternative medical waste treatment
methods, the cost of onsite incineration increases as a
result of the NSPS, especially as the control options become
more stringent. Hence, it can be expected that a major
impact of the NSPS will be to trigger substitution.
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Substitution would probably escalate under Control Options 3
and 4. While there is a cost-saving alternative to only two
model combustors under Control Option 2, there is a cost-
saving alternative to five model combustors under Control
Option 3 and six model combustors under Control Option 4.
The NSPS will directly impact facilities that operate a
new MWI. It will also indirectly impact facilities that
generate medical waste and send it offsite to be
incinerated. This is because such facilities are likely to
pay higher fees for commercial incineration as a result of
the NSPS (and the Emission Guidelines). It is estimated
that the cost of offsite incineration will increase on
average by $4-25/ton under Control Option 2, $20-86/ton
under Control Option 3, and $32-149/ton under Control Option
4 as a result of the NSPS (and the Emission Guidelines).
The ranges reflect different assumptions about the
cumulative effect of the Emission Guidelines on the cost of
offsite incineration.
The great majority of facilities that generate medical
waste and send it offsite for incineration are not
significantly impacted by the NSPS. Under certain
conditions, facilities of this type could experience similar
impacts to MVJI operators. On average, however, impacts for
this type of facility are lower because commercial MWIs are
comparatively large and efficient, and therefore have lower
per-ton impacts from the NSPS.
Substitution will increase the demand for alternative
medical waste treatment methods, including offsite
incineration. As a result, it is expected that, despite
control costs, output at commercial incineration facilities
will not be adversely impacted by the NSPS. This means that
commercial incineration facilities will be able to recover
control costs by increasing prices.
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Substitution will also reduce the demand for
noncommercial (onsite) MWIs. This would have a negative
impact on the sales of some MWI vendors. MWI sales could
also be adversely affected if controls for new MWIs under
the NSPS are significantly more stringent than controls for
existing MWIs under the Emission Guidelines. This night
prompt MWI operators to postpone replacing existing MWIs
with new MWIs.
Impacts of the NSPS on taxpayers are minimal. In some
rare cases — specifically requiring an MWI to be operated
by a facility under the jurisdiction of a government unit
with a population of only several thousand —• the impacts of
controls might be considered significant. If the impacts
are significant, however, they are expected to be avoided by
substitution.
An analysis of the potential for significant impacts on
small entities is conducted. This involves determining,
according to EPA criteria, whether the NSPS has a
"significant economic impact on a substantial number of
small entities." Some "small" medical waste generators, as
well as "small" commercial incineration facilities and
government jurisdictions, may be "significantly" impacted
under Control Options 3 and 4. However, because the NSPS
(and the Emission Guidelines) will cause the demand for
offsite incineration to increase, it is expected that
commercial incineration facilities will be able to recoup
control costs by passing them along to customers.
Furthermore, the number of small medical waste generators
and government jurisdictions that will be significantly
impacted should not be "substantial." This is in part due
to the opportunity that the great majority of facilities
will have to avoid the impacts of control costs by
substituting. Hence, it is concluded that the NSPS will not
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have a significant economic impact on a substantial number
of small entities.
2 . 0 BACKGROUND
2.1 MWI POPULATION
The NSPS applies to "new" MWIs, comprising newly built,
modified, and reconstructed units. MWI sales in the U.S.
are projected to total 702 units in the fifth year following
adoption of the NSPS. This projection was derived by
extrapolating the sales of seven vendors -- believed to
represent about two-thirds of the market -- from 1985 to
1989. As such, the projection is only for new units sold
(newly built units). Modified units are not reflected in
the figure. Neither are reconstructed units. However,
reconstruction, which involves an investment exceeding 50
percent of the replacement cost, is considered to be
impractical in light of the improvements in MWI technology
that have been made in recent years. As an extrapolation
from past sales, the projection of new unit sales does not
reflect potential new medical waste or MWI regulations (such
as the NSPS). On the other hand, sales in the period 1985-
1989 may have already been influenced by the trends toward
stricter regulation of MWIs at the state and local levels,
stricter requirements for medical waste management (i.e.,
hauling, packaging, treatment, transportation, and
disposal), and more inclusive definitions of medical waste.
The nationwide distribution of new MWI sales is
estimated in Table 2. The distribution is represented by
the seven model combustors defined in Section 2.1 of the
Model Plant Description and Cost Report. The model
combustors are identified by type and Ib/day capacity (e.g.,
the Continuous 36,000 is a continuous MWI with a daily
capacity of 36..000 pounds). For the batch unit, the Ib/day
capacity is equal to the Ib/batch design capacity
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TABLE 2. DISTRIBUTION OF NEW MWI SALES
Industry
Hospitals
Nursing homes
Veterinary
facilities
Research labs
Commercial
incineration
facilities
Total
Model MWI
Inter.
Cont.
Inter.
Path.
Inter.
Batch
Inter.
Inter.
Path.
Inter.
Inter.
Cont.
Inter.
Path.
Inter.
Cont.
21,000
24,000
8,400
2,000
2,000
250
8,400
2,000
2,000
2,000
21,000
24,000
8,400
2,000
2,000
36,000
Per-unit
capacity,
tons/yr
1,176
977
470
172
115
27
470
115
172
115
1,176
977
470
172
115
3,907
Projected
nationwide
population
18
56
86
3
237
165
565
1
11
18
1
_5
6
2
4
8
1
21
36
77
702
Abbreviations: Inter. = Intermittent, Cont. = Continuous,
Path. = Pathological.
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(500 Ibs) multiplied by an average of 1/2 batch per day (one
batch every other day). For all other units, the Ib/day
capacity is equal to the Ib/hr design capacity multiplied by
the number of charging hours per day.
The methodology for allocating the model combustors to
industries generating medical waste is also detailed in the
Model Plant Description and Cost Report. Over three-
quarters (565) of new unit sales are to hospitals.
Commercial incineration facilities are next with 77 units.
Relatively few new units are projected to be sold to nursing
homes, veterinary facilities, and research labs.
Per-unit capacity is reported in Table 2 in terms of
tons per year. It is derived from the Ib/hr "actual
capacity" (usually lower than the design capacity) in the
Model Plant Description and Cost Report, considering the
number of charging hours per day and the number of operating
days per year. Within each industry, the model combustors
are listed in descending capacity. The Continuous 36,000
used by commercial incineration facilities is the largest
model MWI, while the Batch 250 used at hospitals is the
smallest.
Commercial incineration facilities account for only
11 o percent (77 * 702) of all new unit sales, but they
account for 64.7 percent of the capacity of new unit sales.
This is because MWIs at commercial incineration facilities
are much larger on average than MWIs at other facilities.
Hospitals account for 31.9 percent of the capacity of new
unit sales. All other facilities account for only 3.4
percent of the capacity of new unit sales.
The predominance of new capacity at commercial
incineration facilities reflects the trends toward stricter
regulation of medical waste incineration at the state and
local levels and more inclusive definitions of medical
waste. Stricter regulations are increasing the per-ton cost
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advantage that offsite (commercial) MWIs tend to have over
onsite MWIs as a result of the economies they achieve from
being, as mentioned, larger on average. Meanwhile,
expanding definitions of medical waste are increasing the
ranks of facilities without onsite medical waste management
expertise that are searching for offsite treatment and
disposal solutions. As a result of these trends, the demand
for offsite incineration is expected to increase. This will
result in an increase in the number of commercial and
regional incineration facilities, with ownership either by a
commercial operator or a group of generators.
A new MWI sale can be a consequence of 1) replacing an
existing MWI, 2) switching from an alternative medical waste
treatment method (e.g., offsite contract disposal) to onsite
incineration, or 3) industry growth. For the industries to
which MWIs will be sold in the next five years, the precise
contribution of each of these factors is not known. In most
of these industries, all three factors may be at work. It
is not believed, however, that switching from an alternative
treatment method to onsite incineration will be prevalent.
More restrictive requirements for medical waste incineration
at the state and local levels are increasing the cost of
onsite incineration not only in comparison to the cost of
commercial incineration, but in comparison to the cost of
other alternative treatment methods as well. Most new MWI
sales are expected to be replacement units. In contrast,
new unit sales to commercial incineration facilities will
mainly reflect growth in the industry resulting from
increased demand for offsite contract treatment and
disposal.
Table 3 compares projected new MWI sales and the
estimated number of existing MWIs in 1989. The total number
of new MWI sales in the next five years, 702, represents
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TABLE 3
COMPARISON OF EXISTING AND NEW MWIs
Hospitals
Nursing homes
Veterinary
facilities
Research labs
Commercial
incineration
facilities
Total
No. of existing
MWIs (1989)
3,150
500
550
500
150
4,850
NO.
^^••^—•—
565
18
36
77
702
Percent of
existing
MWIs
—
17.9%
3.6%
1.1%
7.2%
51.3%
14.5%
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14.5 percent of the total number of existing MWls. (This
does not reflect 14.5 percent growth in the number of MWIs
because the majority of new MWI sales are expected to be
replacement units). In relation to the number of existing
MWIs, commercial incineration facilities will purchase the
most new MWIs over the next five years (77/150 = 51.3%).
2.2 CONTROL COSTS
Per-MWl control costs are presented in Table 4. Both
capital and total annualized costs are used in the economic
impact analysis. Total annualized cost is the sum of annual
O&M costs and annualized capital. Capital is annualized
using the "capital recovery factor" assuming a discount rate
of 10 percent.
2.3 REGULATED INDUSTRIES
The NSPS will directly impact facilities that invest in
and operate a new MWI. The regulation will also indirectly
impact facilities that generate medical waste and send it
offsite to be incinerated by a new MWI. This is because it
can be expected that increased costs of commercial
incineration will be passed along to these facilities. For
example, it can be expected that a fire and rescue operation
that generates medical waste and sends it to a hospital with
a new MWI to be incinerated will have to pay a higher fee
for the hospital's increased cost of incineration. For
modified MWIs (which were operated prior to the NSPS), the
"higher fee" will reflect the increased cost of owning and
operating the MWI, while for newly built MWIs, it will
reflect the cost that would not have been incurred in the
absence of the NSPS. Facilities that generate medical waste
but do not incinerate it onsite are termed "offsite
generators" in this analysis.
With one exception, the economic impact analysis
includes all industries in which the average medical waste
generation rate per facility exceeds 0.25 tons per year.
-14-
-------
TABLE 4. CONTROL COSTS FOR NEW MWIS (1989 DOLLARS)
Model MWI
Cont.
Inter.
Cont.
Inter.
Path.
Inter.
Batch
•
36,000
21,000
24,000
8,400
2,000
2,000
250
C.O.2
70,207
70,207
53,008
39,244
26,534
25,480
23,544
Capital
C.0.3
355,153
355,153
285,274
229,352
177,714
173,430
165,567
C.O.4
795,268
795,268
675,575
579,543
490,428
482,992
469,312
======================8===
TO
C.O.2
47,356
36,695
30,043
17,921
8,200
9,301
9,567
========
'tai annuax iz
C.O.3
207,714
146,992
114,809
81,968
46,669
50,581
46,471
====================
eu
C.0.4
318,671
247,958
202,891
163,047
116,127
120,883
115,247
===================
Abbreviations: Cont. - Continuous, Inter. = Intermittent, Path. = Pathological.
-------
Information on medical waste generation rates is provided in
the "Industry Profile Report For New and Existing
Facilities."3 The exception is residential care facilities
(0.38 tons/yr per facility, on average), which are similar
to, but offer less comprehensive services than, nursing
homes. They are not included in the analysis because their
impacts will be conservatively represented by small (0-19
employees) nursing homes, which, using employment as a scale
factor, are estimated to generate per facility slightly over
one ton of medical waste annually. The selection criterion
excludes health units in industry (0.04 tons/yr) and police
departments (less than 0.08 tons/yr). These categories are
likely to be minimally impacted by the NSPS because of their
low medical waste generation rates.
Table 5 lists the industries generating medical waste
that are included in the economic impact analysis. Also
included in the analysis are commercial incineration
facilities, which are not listed in Table 5 because they do
not generate medical waste.
Table 5 highlights that the vast majority of medical
waste generators will not invest in a new MWI in the next
five years. In & number of categories (e.g., physicians'
offices, blood banks), in fact, no new unit sales are
projected. This is because onsite incineration is
generally not used in these categories (note that these
categories have been assigned no existing MWIs in Table 3).
For some other categories — namely nursing homes,
veterinary facilities, and research labs — some new unit
sales are projected, but the number is low in relation to
the number of existing MWIs (see Table 3). This could
reflect a low replacement rate, low industry growth, or a
low incidence of substitution from alternative treatment
methods to onsite incineration. By far the category with
the greatest incidence of new MWI sales is hospitals (8.2%
-16-
-------
TABLE 5. SUMMARY OF THE INCIDENCE OF NEW MWIs
IN MAJOR INDUSTRIES GENERATING MEDICAL WASTE
— =s===================s===============^==========ss^
Total
no. of
Industry* facilitiesb
Hospitals
Nursing homes
Veterinary facilities
Laboratories
Research
Medical
Dental
Funeral homes
Physicians' offices
Dentists' offices and
clinics
Outpatient care
Physicians' clinics
Kidney dialysis
facilities
Freestanding blood banks
Fire and rescue operations
Correctional facilities
6,882
17,525
21,496
3,826C
6,871
7,970
22,000
191,278
104,213
6,519
839
218
29,840
4,288
No. with
a new MWI
565
18
6
36
0
0
0
0
0
0
0
0
0
0
Percent
of total
8.2%
0.1%
0.0%
0.9%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
•Included if the average medical waste generation rate per facility
exceeds 0.25 tons per year, with the exception of residential care
facilities (0.38 tons/year).
bSee Section 2.4 for sources.
'Commercial facilities only.
-17-
-------
of all current facilities). The "percent of total" in the
table does not necessarily reflect the fraction of current
facilities that will purchase an MWI because some new MWI
sales may be attributable to industry growth (i.e., new
facilities).
A comparison of Tables 3 and 5 reveals that in all
industries that generate medical waste, the majority of
facilities do not currently operate an MWI (i.e., are
offsite generators). A little less than half of all
hospitals currently operate an MWI. In all other
categories, significantly less than half of all facilities,
and in some cases no facilities (or at least an
insignificant number of facilities), currently operate an
MWI.
2.4 MODEL FACILITIES
The economic impact analysis is conducted by comparing
control costs to financial and economic parameters of the
regulated industries. At this point, it is necessary to
establish model facilities with financial and economic
attributes. The model facility data can be used directly to
calculate per-facility economic impacts (Sections 3.5 and
3.6), and can be aggregated to calculate industry-wide
impacts (Section 3.4).
Model facilities are defined in Tables 6A, 6B, and 6C.
The financial and economic parameters assigned to the model
facilities include employment (or full-time-equivalent
employment), annual revenue, annual before-tax and after-tax
net income, total assets, and net worth (assets minus
liabilities). All of the parameters are averages per
facility. Therefore, the model facilities represent average
or typical establishments. All dollar figures (e.g.,
revenue, net income) are in 1989 dollars.
To account for heterogeneity, most industry categories
are divided into "subcategories," i.e., they are assigned
-18-
-------
TABLE 6A. MODEL FACILITIES: HOSPITALS
vo
I
Industry subeategory
AHA -registered
Federal
Psychiatric
Other special t general
<50 Beds
50-99 Beds
100-299 Beds
300* Beds
Non- federal
Psychiatric
Not-for-profit
For-prof it
State govt.
Local govt.
T.B. £ other resp. diseases
Long-term other special t gen.
Not-for-profit
For-prof it
State govt.
Local govt.
Short-term other special t gen.
Not-for-profit
<50 Beds
50-99 Beds
100-299 Beds
300* Beds
ror-proflt
<50 Beds
50-99 Beds
100-299 Beds
300* Beds
Perc. of
No. of all in No. of
fee. industry beds
17
97
32
83
111
127
356
245
13
4
63
20
28
27
502
643
1.357
731
107
220
395
47
0.2X
1.4X
0.5X
1.2X
1.6X
1.8X
5.2X
3.6X
0.2X
0.1X
0.9X
0.3X
0.4X
0.4X
7.3X
9.3X
19.7X
10.6X
1.6X
3.2X
5.7X
0.7X
709
28
66
186
616
99
88
459
367
119
151
83
227
370
34
72
185
475
36
74
188
387
a
FTE
crop.
1.119
225
436
697
1.582
229
152
783
711
241
352
259
396
641
92
200
641
1.928
86
178
414
1,034
Before-
Annual tax
expenses prof.
(t inn) marg.
48.4
8.1
17.5
37.6
88.3
10.9
8.7
29.1
33.3
9.4
16.1
12.6
17.2
27.9
4.2
9.7
34.7
111.5
4.6
11.0
27.9
70.3
3.40X
2.45X
2.45X
3.95X
3.61X
3.40X
4.86X
3.40X
3.40X
N/A
3.53X
3. BIX
3.51X
3.51X
2.41X
2.41X
3.33X
4.33X
-0.18X
-0.18X
4.64X
6.99X
Average per facility
After- Before- After-
tax Annual tax tax
prof, revenue net net Assets/
marg. ($ ntn) Income Income rev.
3.40X
2.45X
2.45X
3.95X
3.61X
3.40X
3.40X
3.40X
3.40X
3.50X
3.S3X
2.67X
3.51X
3.51X
2.41X
2.41X
3.33X
4.33X
-0.18X
-0.18X
3.25X
4.89X
50.1 $1.703.520 $1,703,520 0.863
0.937
8.3 $203.434 $203.434
17.9 $439,518 $439,518
39.1 $1.546,278 $1,546.278
91.6 $3,307.013 $3.307.013
0.863
11.3 $383,644 $383.644
9.1 $444,144 $310,901
30.1 $1.024,224 $1.024,224
34.5 $1,172,050 $1,172,050
9.7 N/A $340,933 0.94
0.937
16.7 $589,126 $589,126
13.1 $499,658 $349,761
17.8 $625,681 $625.681
28.9 $1.014,913 $1,014.913
0.937
4.3 $103,720 $103.720
9.9 $239,543 $239.543
35.9 $1,195,314 $1,195.314
116.5 $5,046.462 $5,046,462
4.6 ($8,265) ($8.265)
11.0 ($19,764) ($19.764)
29.3 $1.358.427 $950,899
75.6 $5,279.788 $3.695.852
Net
Assets worth/
($ mm) assets
43.2 0.458
0.506
7.8
16.8
36.7
85.8
0.458
9.7
7.9
26.0
29.7
9.2 0.521
0.506
15.6
12.3
16.7
27.1
0.506
4.0
9.3
33.6
109.2
4.3
10.3
27.4
70.8
Net
worth
($ rnn)
19.8
3.9
8.5
18.6
43.4
4.5
3.6
11.9
13.6
4.8
7.9
6.2
8.5
13.7
2.0
4.7
17.0
55.3
2.2
5.2
13.9
35.8
-------
TABLE 6A. MODEL FACILITIES: HOSPITALS CCONT.)
i
t\>
O
ae_ea« aa_a sx_x«KKMM*s*Sfl
Industry subcategory
Short -term other special i gen.
(continued)
State govt.
<50 Beds
50-99 Beds
100-299 Beds
300+ Beds
Local govt.
<50 Beds
50-99 Beds
100-299 Beds
300+ Beds
Non- AHA- registered
Non-Federal psychiatric
Short-term other special t gen.
Other
Total
<50 Beds
50-99 Beds
100-299 Beds
300+ Beds
Subset : community hosp.
Urban
<50 Beds
50-99 Beds
100-299 Beds
300+ Beds
Rural
<50 Beds
50-99 Beds
100-299 Beds
300+ Beds
a
Full-time-equivalent.
N/A Not available.
Sources: See Section 2.4.
Average per facility
No. of
fac.
23
15
25
36
584
417
302
93
92
58
12
6,882
1,497
1.704
2.457
1.224
5.455
2.958
218
448
1.426
866
2.497
970
840
647
40
Perc. of
all in No. of
industry
0.3X
0.2X
0.4X
0.5X
8.5X
6. IX
4.4X
1.4X
1.3X
O.BX
0.2X
100. OX
21. 8X
24.8X
35. 7X
17.8X
79.3X
43.0X
3.2X
6.SX
20. 7X
12.6X
36.3X
14. IX
12.2X
9.4X
0.6X
txxte
29
70
177
532
33
71
165
521
81
54
124
180
34
72
176
516
171
245
83
a
FTE
enp.
64
163
614
2,902
71
164
490
2,262
136
121
249
575
89
182
551
1,767
605
938
211
Annual
expenses
(t mm)
3.5
8.7
34.2
162.8
2.8
7.0
24.5
130.7
6.4
5.8
11.7
31.4
3.9
8.9
30.2
98.7
33.9
54.5
9.5
Before-
tax
prof.
mnrg.
2.45X
2.45X
3.95X
3.61X
2.4SX
2.45X
3.95X
3.61X
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
After-
tax
prof.
marg.
2.45X
2.45X
3.95X
3.61X
2.45X
2.45X
3.95X
3.61X
3.40X
3.44X
3.44X
3.44X
2.09X
2.09X
3.42X
4.24X
3.44X
3.38X
1.01X
1.01X
2.90X
4.16X
3.53X
2.52X
2.52X
4.16X
5.28X
Annual
revenue
(t mm)
3.6
8.9
35.6
168.9
2.9
7.2
25.5
135.6
6.4
6.0
12.1
32.5
4.0
9.1
31.3
103.1
35.1
56.4
9.8
Before- After-
tax tax
net net Assets/
income Income rev.
$87,904 $87,904
$218,503 $218,503
$1,406,455 $1,406.455
$6,097,189 $6,097,189
$70,323 $70.323
$175.807 $175.807
$1.007,548 $1,007.548
$4,894,979 $4,894.979
N/A $217.600 0.863
N/A $206.628 0.937
N/A $416.819 0.937
N/A $1.118.641 0.937
N/A $83.250
N/A $189.981
N/A $1.069.414
N/A $4,370.175
N/A $1,207.705 0.937
N/A $1,906,541
N/A
N/A
N/A
N/A
N/A $347,621
N/A
N/A
N/A
N/A
Net
Assets worth/
($ mm) assets
3.4
8.4
33.4
158.3
2.7
6.7
23.9
127.1
5.5 0.458
5.6 0.506
11.4 0.506
30.5 0.506
3.7
8.5
29.3
96.6
32.9 0.506
52.9
9.2
Net
north
($ mm)
1.7
4.2
16.9
80.1
1.4
3.4
12.1
64.3
2.5
2.8
5.7
15.4
1.9
4.3
14.8
48.9
16.6
26.7
4.7
-------
TABLE 68. MODEL FACILITIES: MUI OPERATORS OTHER THAU HOSPITALS
i
IX)
Industry
Nursing homes
100* Employes
Tan-paying
Tan-exempt
Veterinary facilities
10-19 Employees
20* Employees
Commercial research labs
Tax-paying
20-99 Employees
100* Employees
Tax-exempt
Commercial Incineration fac.
-==»———a—sasses2K==s^ssc=Ksa***
N/A Not available.
Sources: See Section 2.4. text.
:*====. =rr=r=
Perc. of
No. of all in
fac. industry
17,525
3,643
1,416
21,496
2,584
595
3,826
576
169
304
75
20. 8X
8. IX
12. OX
2.8X
15. IX
4.4X
7.9X
-.
Emp.
141.3
187.6
12.9
29.3
33.9
356.9
147.7
N/A
Average
Before- After- Before-
Annual tax tax tax
revenue or prof. prof. net
budget mnrg. mnrg. income
$3,498.600
$4.871,800
$908.442
$1.966.262
$2.800.300
$30.487.200
$13.450.000
$2,000.000
4. OX 2.8X $139,944
2.8X 2.8X $136.410
$349.750
$757,011
6. OX 4.2X
$168,018
$1,829.232
4.2X 4.2X $564.900
N/A
per facility
After-
tax
not
income
$97,961
$136,410
$244,825
$529.908
$117,613
$1,280.462
$564,900
N/A
Assets/
rev. Assets
0.67
$2.344.062
$3.264,106
0 316
$287.068
$621,339
0.532
$1.489.760
$16.219,190
$7,155,400
N/A
Net
worth/ Net
assets worth
0.371
$869.647
$1,210.983
0.506
$145.256
$314,397
0.566
$843,204
$9,180.062
$4.049.956
N/A
-------
TJBLE 6C. MOOEl FACILITIES: OFFSITE GENERATORS
Average per facility
Industry
Nursing homes
0-19 Employees
Tax -pay ing
Tax-exempt
20-99 Employees
Tax-paying
Tax-exempt
Physicians' offices
Dentists' offices t clinics
Offices
Clinics
Tax-paying
Tax-exempt
Outpatient care (clinics)
Physicians' clinics(amb. care)
Tax-paying
Tax-exempt
Freestanding kidney dial. fee.
Tax-paying
Tax-exempt
Freestanding blood banks
Veterinary facilities
0-9 Employees
Laboratories
Commercial research
Tax-paying
0-19 Employees
Other
Medical
Dental
Funeral homes
Fire t rescue
Corrections
Federal govt.
State govt.
local govt.
No. of
fac.
17.525
2.099
1,017
7,673
1,677
191,278
103,665
486
62
4,224
2.295
711
128
218
21,496
18,317
3,826
2,777
6,871
7,970
22,000
29,840
47
903
3.338
Perc. of
alt in
industry
12. OX
5. ex
43. 8X
9.62
99. 5X
0.5X
0.1X
64. 8X
35.2%
84. 7X
15.32
85.22
72. 6X
1.1X
21. IX
77. 8X
Emp.
6.9
8.0
56.3
58.2
5.4
4.7
9.5
14.5
23.8
36.9
18.4
29.0
61.0
2.9
4.6
13.3
5.1
7.0
9.9
276.6
292.2
44.2
Annual
revenue or
budget
$189,700
$237.800
$1.260.000
$1.302,700
$498.200
$260.900
$538.100
$1.577,100
$1.790,000
$2,736,600
$1.319,300
$1.785,400
$5.685,000
$213.149
$357,600
$861,300
$216.000
$450,000
$413.800
$25,900,000
$17,000,000
$2.300,000
Before- After- Before-
tax tax tax
prof. prof. net
marg. marg. income
4. OX 2.8X $7,588
2.8% 2.8X $6,658
4. OX 2.8X $50,
2.8% 2.82 $36,
$226,
$89,
$172,
4. OX 2.8X $71,
2.8X 2.8X $76,
10. 7X 7.5X $141,
7.52 7.5X $133,
$82,
6. OX 4.2X $21,
8.9X 6.2X $76,
9. OX 6.3X $19,
11. 4X 8. OX $51,
400
476
661
166
253
N/A
600
625
165
905
N/A
063
456
287
440
429
N/A
N/A
After-
tax
net
income
$5.312
$6,658
$35.280
$36,476
$158,663
$62,416
$120,577
N/A
$50,120
$76,625
$98,948
$133,905
N/A
$57,444
$15.019
$53.401
$13.608
$36,000
N/A
N/A
•"—""
Assets/
rev. Assets
0.67
0.157
0.198
0.157
0.647
0.316
0.532
0.47
0.298
0.778
$127,099
$159.326
$844,200
$872,809
$78.217
$51.658
$106.544
$312,266
$281,030
$429,646
$853.587
$1.155,154
N/A
$67,355
$190,243
$404.811
$64,368
$350,100
N/A
N/A
Net
worth/
assets
0.371
0.499
0.535
0.499
0.562
0.506
0.566
0.462
0.539
0.543
Net
worth
•
$47.154
$59.110
$313.198
$323,812
$39,030
$27,637
$57,001
$167,062
$140,234
$214,393
$479,716
$649, 196
N/A
$34,082
$107,678
$187,023
$34,694
$190,104
N/A
N/A
N/A Not available.
Sources: See Section 2.4, text.
-------
more than one model facility. For example, tax-paying and
tax-exempt establishments are distinguished. Subcategories
are also created whenever there is significant variation in
the size of facilities. This will permit the assessment of
differential impacts on different-size facilities. The size
dispersion of nursing homes, for example, is accounted for
by specifying model facilities with 0-19, 20-99, and 100+
employees.
Table 6A represents hospitals. MWIs are potentially
operated in all of the numerous hospital subcategories.
Table 6B includes other industries and industry
subcategories in which MWIs are potentially operated. Table
6C represents offsite generators. Due mainly to the small
amount of medical waste they generate, the model facilities
in Table 6C are not likely to operate an MWI. Offsite
generators will not directly incur control costs, but will
instead be indirectly impacted by the NSPS by having to pay
higher fees for offsite incineration.
The NSPS will impact establishments that cover the
gamut of organizational structures: for-profit,
not-for-profit, and public (i.e., government). Often, not-
for-profit and public establishments do not earn profits,
per se. Rather, they operate at a surplus or deficit. In
these cases, net income can be construed as a measure of the
surplus or deficit. Also, some not-for-profit and public
establishments do not generate revenues (fire departments,
for example). Rather, they have a budget to pay for their
expenses. Not-for-profit organizations often are
underwritten by grants, donations, and fund-raising
proceeds, while public establishments typically are
appropriated tax revenues. In these cases, revenue and the
budget will be treated as synonymous.
The revenue estimates in Tables 6A, 6B, and 6C
represent revenues of entire facilities. It is not believed
-23-
-------
that in any case this will lead to a significant
overstatement of the "revenue basis." The revenue basis is
the amount of revenue that is dependent on the product or
process being regulated, and to which a potential price
increase (in order to recover control costs) would be
applied. The revenue basis would be overstated if medical
waste generation (and the subsequent necessary treatment and
disposal) is not a necessary by-product of all operations of
the establishment. Most of the regulated industries do not
have diverse product lines, however. The generation of
medical waste is likely to be a necessary by-product of all
operations. Hospitals may be an exception. However, if a
hospital department does not generate medical waste, it is
probably still interdependent with departments that do.
Therefore, total revenue would be representative of the
revenue basis.
With the exception of hospitals, uniform after-tax
profit rates are specified in each industry category. It is
assumed, for example, that profitability does not vary by
establishment size. This is similar to an assumption of
perfect competition, with every firm earning a normal
profit. In reality, profit rates within an industry are not
uniform. To the extent profitability is variable,
profitability impacts will be overstated for facilities with
profit rates above the industry average, and understated for
facilities performing below the industry average.
For tax-paying facilities, all before-tax profit
margins are calculated from after-tax profit margins, or
vice versa, using an average tax rate of 30 percent. The
statutory Federal corporate tax rate is 15 percent for the
first $50,000 in income, 25 percent for the next $25,000,
and 34 percent for all incremental income (i.e., income
above $75,000). Because the regulated establishments are
predominantly small, roost will have effective Federal tax
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rates significantly below 34 percent. State and local
income taxes, which can average around 5 percent, must also
be considered. All in all, an average total tax rate of 30
percent is considered appropriate. Before-tax and after-tax
net income are calculated by applying the before-tax and
after-tax profit margins, respectively, to revenue.
Tax-exempt establishments do not pay income taxes, of
course. Public (government) establishments are tax-exempt
So are many not-for-profit establishments, though nonprofit
status is only a prerequisite for exemption. Other
requirements must be satisfied in order to achieve tax-
exempt status.' Note in Tables 6A, 6B, and 6C that not-for-
profit model facilities are specified only for hospitals
(Table 6A). These facilities are assumed to all be tax-
exempt. This is because a minimum of 1,145 for-profit
hospitals - which are tax-paying - are represented in
Table 6A. This constitutes 17 percent of the total number
of hospitals, 6,882 ("Total" in Table 6A). The 1987 Census
of Service Industries, in turn, reports that 19 percent of
all hospitals are tax-paying.5 This suggests that the vast
majority of not-for-profit hospitals are tax-exempt.
By definition, tax-exempt establishments have identical
before-tax and after-tax profit margins. For industry
categories and subcategories consisting of both tax-paying
and tax-exempt establishments, it is assumed that tax-exempt
establishments have the same after-tax profit margin as tax-
paying establishments. This is based on the notion that
tax-paying and tax-exempt establishments will tend to have
after-tax, rather than before-tax, profit rates that are
aligned. If before-tax profit rates were aligned,
for-profit establishments would be at an unsustainable
competitive disadvantage after paying taxes.
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Following is an industry-by-industry discussion of the
sources of data in Tables 6A, 6B, and 6C, and ways in which
the data can be interpreted and used.
2.4.1 Hospitals
All information on the number of facilities, the number
of beds, full-time-equivalent (FTE) employment, and annual
expenses is from the American Hospital Association's (AHA's)
"1989 Annual Survey of Hospitals," the results of which were
published in the 1990-91 edition of Hospital Statistics.6
The data therefore pertain to 1989. The total number of
hospitals in the U.S. counted by the AHA, 6,882, appears in
Table 6A on the line "Total." At the bottom of the table is
a subset of all hospitals in the U.S.: community hospitals,
distinguished between urban and rural. Urban hospitals are
classified as being inside of, and rural hospitals as
outside of, Metropolitan Statistical Areas, as defined by
the U.S. Office of Management and Budget. Metropolitan
Statistical Areas include cities and their environs (e.g.,
suburbs). Consequently, the urban subcategory includes both
urban and suburban hospitals.
With the exception of psychiatric hospitals and the
t.b.(tuberculosis) and other respiratory diseases
subcategory, after-tax profit margins are from the 1990
edition of The Sourcebookf published by Health Care
Investment Analysts, Inc. (HCIA), a research firm in
Baltimore, MD.7 The 1990 edition of The Sourcebook reports
results for 1989. HCIA compiles statistical information
annually from cost reports filed by the majority of
hospitals in the U.S. that participate in Medicare. The
statistical measure in The Sourcebook used to measure the
after-tax profit margin is the median (50th percentile)
"total profit margin" (after taxes). The total profit
margin, unlike the "operating profit margin," accounts for
revenues from all sources, including sources not related to
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patient care, such as philanthropic contributions,
investment income, and government grants.
The total profit margin is disaggregated by HCIA for
hospitals in the following bed-size groupings: 50-99,
100-249, 250-399, and 400 and over. In contrast, as the row
headings in Table 6A reveal, the bed-size groupings used to
disaggregate hospitals in the economic impact analysis are
fewer than 50, 50-99, 100-299, and 300 or more. Although
the match is not perfect, the profitability of hospitals
with 50-99 beds is used to represent hospitals with fewer
than 50 beds and 50-99 beds; the profitability of hospitals
with 100-249 beds is used for hospitals with 100-299 beds;
and the more conservative, or lesser, of the profitabilities
of hospitals with 250-399 and 400 or more beds is used for
hospitals with 300 or more beds (in all cases this turned
out to be the profitability of hospitals with 250-399 beds).
The overall (nationwide) median total profit margin in
1989 was 3.44 percent. This is applied to "Total" and to
several subcategories that are composed of more than one
type of hospital. The median margin was 3.53 percent for
not-for-profit hospitals, 2.67 percent for investor-owned
(for-profit) hospitals, and 3.51 percent for state and local
government hospitals. 1989 was the first year in which
for-profits were less profitable than the other two
categories. In another departure from the past, rural
hospitals were more profitable than urban hospitals (3.53%
vs. 3.38%, respectively). As mentioned, the urban hospitals
subcategory includes both inner-city and suburban hospitals.
Inner-city hospitals tend to be far less profitable than
suburban hospitals. One subcategory, short-term other
special and general for-profit hospitals with fewer than 100
beds, had a negative median total profit margin: -0.18
percent.
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The HCIA database does not include psychiatric and
tuberculosis hospitals. For psychiatric hospitals, the
average after-tax profit margin found for SIC 8063,
Psychiatric Hospitals, in a 1990 survey by Dun and
Bradstreet, Inc. is used.1 Dun and Bradstreet's 1990 survey
findings for SIC 8069, Specialty Hospitals, Except
Psychiatric, are used for the tuberculosis hospitals
subcategory. Another subcategory not covered by HCIA is
Federal hospitals. This is because they do not have
Medicare patients. It is assumed that the profitability of
Federal hospitals is the sane as that of state and local
government hospitals.
Annual revenue in Table 6A is equal to annual expenses
divided by one minus the before-tax profit margin. The
before-tax profit margin is used in this equation because
expenses do not include taxes.
The ratios of assets to revenue and net worth to assets
are from the 1990 Dun and Bradstreet survey. SIC 8063,
Psychiatric Hospitals, is used for psychiatric hospitals;
SIC 8069, Specialty Hospitals, Except Psychiatric, is used
for tuberculosis hospitals; and SIC 8062, General Medical
and Surgical Hospitals, is used for all else, including
"Total." Assets and net worth are then calculated by
applying the ratios to revenue.
2.4.2 Nursing Homes
For both tax-paying and tax-exempt nursing homes, three
size subcategories are defined: 0-19 employees, 20-99
employees, and 100+ employees. Nursing homes with 100+
employees are classified in Table 6B because they
potentially operate an MWI. While it is estimated that 500
existing MWIs are operated at nursing homes nationwide (see
Table 3), there are over 5,000 nursing homes with 100+
employees.' The typical nursing home with 0-19 or 20-99
employees, on the other hand, is not likely to operate an
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MWI and is therefore classified in Table 6C. Nursing homes
in the U.S. are estimated to generate 198,000 tons per year
of medical waste. Allocating this to the model facilities
according to employment, a scale factor, the average nursing
home with 20-99 employees is estimated to generate 8.4 tons
per year of medical waste. This falls far short of the
capacity of the smallest model combustor assigned to nursing
homes — 115 tons/yr for the Intermittent 2,000 —
suggesting that it is not common for a nursing home with 20-
99 employees to operate an MWI.
The total number of nursing homes in the U.S., 17,525,
and the break-out by employee-size class, are from the 1987
Census. Employment and revenue are also from the 1987
Census. However, revenue from the Census has been inflated
by 13.7 percent, the change in the fixed-weighted price
index for personal consumption expenditures on medical care
from 1987 to 1989.10 This adjusts revenue to 1989 dollars.
The after-tax profit margin, the ratio of assets to
revenue, and the ratio of net worth to assets, are all
weighted averages, based on the number of tax-paying
establishments nationwide, of SICs 8051, 8052, and 8059 —
the three SICs comprising nursing home care — in the 1990
Dun and Bradstreet survey.
2.4.3 Physicians7 Offices
Physicians' offices do not in general operate an MWI.
Therefore, they are classified as offsite generators in
Table 6C, Physicians' offices are represented by Offices of
Physicians, which is set apart by the Bureau of the Census
as a subset of SIC 8011, Offices and Clinics of Doctors of
Medicine. Actually, this subset does include clinics "owned
and operated by physicians associated for the purpose of
carrying on their profession."11 All other clinics are
included in the subset Clinics of Physicians, which is
assigned to outpatient care in Section 2.4.5. The number of
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establishments, employment, and revenue are all from the
1987 Census. As with nursing homes, revenue is increased by
13.7 percent so as to be on a 1989 basis. All Offices of
Physicians in the 1987 Census are tax-paying.
Before-tax net income is calculated as the product of
the average number of non-Federal office-based medical
doctors rendering patient care per practice in 1986/1987,
1.71, and the median "take-home" income for office-based
physicians in 1989, $132,550.12-13 Assuming that take-home
income consists of wages or earnings from an unincorporated
business, personal taxes will have to be paid. To calculate
after-tax net income, an average personal tax rate of 30
percent — the same as the corporate tax rate — is used.
The ratios of assets to revenue and net worth to assets
are from the 1990 Dun and Bradstreet survey of SIC 8011.
2.4.4 Dentists' Offices and Clinics
Like physicians' offices, dentists' offices and clinics
generally do not operate an MWI and are therefore included
in Table 6C. The number of facilities, employment, and
revenue are all from the 1987 Census (SIC 8021, Offices and
Clinics of Dentists). Again, revenue is adjusted to 1989
dollars by inflating by 13.7 percent.
Before-tax net income is calculated as the product of
average take-home income per practitioner and the average
number of dentists per practice. Average take-home income
per practitioner in 1983 (the last year for which
information was available) was $55,570.M This is inflated
to 1989 using the change in the GNP implicit price deflator
from 1983 to 1989 (+21.6%). The number of dentists per
practice is derived by apportioning the total number of
active dentists in the U.S. in 1986, 137,900, to offices and
clinics according to employment in the 1987 Census." This
yields an average of 1.32 dentists per office and 2.55 per
clinic. After-tax net income is based on an assumed average
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personal tax rate of 30 percent. No basis was available for
calculating net income at tax-exempt clinics.
The ratios of assets to revenue and net worth to assets
are from the 1990 Dun and Bradstreet survey of SIC 8021.
2.4.5 Outpatient Care
Outpatient care facilities are classified as offsite
generators in Table 6C. In the "Market Profile Report,"
ambulatory care centers, managed care organizations, and
kidney dialysis facilities represent the outpatient care
category.16 Here, in the economic impact analysis, managed
care organizations are excluded because they are not
exclusively health care providers. As insurers, they also
serve as vehicles for the financing of health care. In
fact, many managed care organizations do not provide any
health care directly, but rather arrange so that their
subscribers receive health care from independent providers.
As a result, managed care organizations and some of the
industry categories included in the economic impact analysis
(e.g., hospitals, physicians' offices) are not mutually
exclusive.
The two subcategories representing outpatient care in
the economic impact analysis are kidney dialysis facilities
and physicians' clinics. Kidney dialysis facilities are
classified in SIC 8092. Clinics of Physicians, a subset of
SIC 8011, is used to represent ambulatory care centers.
Table 6C shows a total of 6,519 physicians' clinics. The
estimated total number of ambulatory care centers in the
U.S. is fairly close: 1,221 ambulatory surgery centers and
4,000 general ambulatory care centers."•" Therefore, the
Clinics of Physicians subset of SIC 8011 is considered to be
fairly representative of ambulatory care centers.
Medical waste is generated by outpatient care
facilities other than physicians' clinics and kidney
dialysis facilities, Other types of outpatient generators
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include home health care agencies, hospices, and drug
treatment centers. However, they tend to generate less
medical waste than physician's clinics and kidney dialysis
facilities. Therefore, it is assumed that economic impacts
for other types of outpatient facilities will be
conservatively represented by the impacts calculated for
physician's offices and kidney dialysis facilities.
For both physicians' clinics and kidney dialysis
facilities, the number of facilities, employment, and
revenue are from the 1987 Census. Revenue is increased by
13.7 percent for adjustment to 1989 dollars.
The before-tax profit margin specified for tax-paying
physicians' clinics, 4.0 percent, is the average among 180
facilities of multi-unit ambulatory care chains surveyed by
Modern Healthcare in 1989." The average after-tax profit
margin in the 1990 Dun and Bradstreet survey of SIC 8092,
Kidney Dialysis Centers, is used for both tax-paying and
tax-exempt kidney dialysis facilities.
The ratios of assets to revenue and net worth to assets
are also taken from the 1990 Dun and Bradstreet survey (SIC
8011 for physicians' offices and SIC 8092 for kidney
dialysis facilities).
2.4.6 Freestanding Blood Banks
Blood banks are classified as offsite generators in
Table 6C. The total number of facilities, 218, reflects the
164 freestanding blood banks that are members of the
American Association of Blood Banks, one freestanding
facility that is not a member, and the 53 regional Red Cross
centers.20 Employment and revenue were estimated by
Jack Faucett Associates in 1987.21 Revenue has been
increased by 13.7 percent for adjustment to 1989 dollars.
Profitability data are not available. All freestanding
blood banks are not-for-profit.27
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2.4.7 Veterinary Facilities
Three subcategories of veterinary facilities are
defined: 0-9 employees, 10-19 employees, and 20+ employees.
As in all other industry categories, MWIs will tend to be
located at larger facilities (which may in some cases be
better regarded as animal hospitals than as veterinary
offices or clinics). Veterinary facilities with 20+
employees potentially operate an MWI and are therefore
included in Table 6B. There are 595 such facilities in the
U.S.23-24 The estimated number of existing MWIs in the
industry is 550 (see Table 3). Since even among the larger
facilities, operating an MWI is not universal, it is likely
that in addition to veterinary facilities with 20+
employees, some veterinary facilities with 10-19 employees
(of which there are 2,584 in the U.S.) also operate an MWI.
Consequently, these facilities are also classified as MWI
operators in Table 6B. However, it is possible that
relatively few veterinary facilities with 10-19 employees
operate an MWI. As a result, the typical veterinary
facility with 10-19 employees that operates an MWI is likely
to be larger than the average facility in this subcategory,
represented by the model parameters in Table 6B. This
implies that impacts calculated for veterinary facilities
with 10-19 employees will probably be conservative. Based
on the average industry ratio of 0.30 tons/yr of medical
waste generated per employee (31,000 tons generated, 103,887
employees), the average veterinary facility with 10-19
employees is estimated to generate only 3.8 tons per year.25
This would not warrant operating even the Intermittent
2,000, which has a capacity of 115 tons per year.
Veterinary facilities with 0-9 employees are classified as
offsite generators in Table 6C.
The total number of facilities, 21,496, was cited by
the Veterinary Medicine Publishing Company in 1989.2
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disaggregation of the number of facilities and employment
are from 1988 County Business Patterns (CBP)." The total
number of establishments reported in CBP is only 16,687.
However, CBP does not cover establishments without paid
employees. It is conceivable that many veterinary
practices do not have any paid employees (e.g., the owner is
the only employee, and is not paid wages, but rather is paid
from the business's earnings). It is assumed, therefore,
that practices without paid employees account for the
difference between the two estimates.
Estimated average revenue for a veterinary facility in
1989 is $344,800. This is based on an average of 2.56
veterinarians per practice and Veterinary Economics/
estimate of average revenue per veterinarian of $134,704 .28-29
The disaggregated revenues are calculated using the
distribution of facility sizes in CBP, and assuming a
constant ratio of payroll to revenue (CBP reports payroll,
not revenue). It is assumed additionally that revenue is
the same for facilities without any paid employees as for
facilities with 1-4 employees, the smallest disaggregation
in CBP.
Average before-tax net income is equal to the average
of 2.56 veterinarians per practice, multiplied by an average
take-home income per veterinarian of $51,900.30 After-tax
net income assumes an average personal tax rate of 30
percent. Before-tax and after-tax net income are
apportioned to the three subcategories in proportion to the
disaggregation of revenue.
The ratios of assets to revenue and net worth to assets
are weighted averages, based on the number of respondents,
of SICs 0741, Veterinary Services for Livestock, and 0742,
Veterinary Services for Animal Specialties, in the 1990 Dun
and Bradstreet survey.
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2.4.8 Laboratories
Among all types of laboratories, MWIs are found
predominantly in research laboratories. Medical and dental
laboratories, therefore, are considered to be offsite
generators and are classified in Table 6C. Research labs
are represented in Tables 6B and 6C by commercial
establishments. Tax-paying commercial research labs with 0-
19 employees are classified as offsite generators in Table
6C. Tax-paying commercial research labs with 20-99 and 100+
employees, and tax-exempt commercial research labs (147.7
employees per facility, on average), are classified as MWI
operators in Table 6B.
In addition to commercial research labs, which are
independent and stand-alone, MWIs are also operated by
research laboratories that are captive to a larger
organization such as a pharmaceutical company or a research
university. Captive research labs that are integrated with
other operations of an umbrella organization will tend to be
impacted less by the NSPS than independent, stand-alone labs
because their revenue basis will be greater. However,
impacts measured for commercial research labs will be
representative of impacts on captive research labs that are
separate profit centers (and therefore are effectively
stand-alone).
There are 169 tax-paying commercial research labs with
100+ employees and 304 tax-exempt commercial research labs
in the U.S.51-32 These subcategories do not fully account for
the industry's allocation of 500 existing MWIs. However, as
discussed, captive research labs also operate MWIs.
Therefore, it is possible that relatively few tax-paying
commercial research labs with 20-99 employees (of which
there are 576 in the U.S.) operate an MWI. As a result, the
typical tax-paying commercial research lab with 20-99
employees that operates an MWI is likely to be larger than
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the average facility in this subcategory, represented by the
model parameters in Table 6B. This implies that impacts
calculated for tax-paying commercial research labs with 20-
99 employees will probably be conservative. Based on the
average industry ratio of 0.40 tons/yr of medical waste
generated per employee (55,500 tons generated, 137,517
employees), the average tax-paying commercial research lab
with 20-99 employees is estimated to generate only 13.7 tons
per year." This would not warrant operating the
Intermittent 2,000, which has a capacity of 115 tons per
year.
For all categories of labs — research, medical, and
dental — the number of facilities, employment, and revenue
are from the 1987 Census. SIC 8731, Commercial Physical and
Biological Research, represents commercial research labs.
Medical and dental labs are classified in SICs 8071 and
8072, respectively. In order to adjust to 1989 dollars,
revenue is increased by 7.6 percent, the change in the GNP
implicit price deflator from 1987 to 1989.
The after-tax profit margin, the ratio of assets to
revenue, and the ratio of net worth to assets are from SICs
8071, 8072, and 8731 in the 1990 Dun and Bradstreet survey.
2.4.9 Funeral Homes
As offsite generators, funeral homes are classified in
Table 6C. It is estimated that there are 22,000 funeral
homes in the U.S.34 The average revenue of a funeral home is
based on an average of 150 funerals per year and $3,000 per
funeral.35 Employment, the after-tax profit margin, the
ratio of assets to revenue, and the ratio of net worth to
assets are all from the 1990 Dun and Bradstreet survey of
SIC 7261, Funeral Service and Crematories. Employment is
adjusted, however, to reflect that SIC 7261 is a
heterogenous grouping of funeral homes and crematories.
Revenue per employee in SIC 7261 is $64,141. Applying this
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to the estimated revenue per funeral home of $450,000 yields
an average of 7.0 employees per funeral home. This exceeds
the overall average in SIC 7261 of 5.3 employees per
facility, reflecting that funeral homes are larger on
average than crematories.
2.4.10 fire and Rescue
As offsite generators, fire and rescue operations are
included in Table 6C. The number of facilities represents
the number of public fire departments in the U.S., estimated
by Jack Faucett Associates in 1987.* This number is
composed of 23,157 fire departments that are all-volunteer,
1,999 that have fully career staffs, and 4,684 that are part
career, part volunteer. Public fire departments in the U.S.
are operated by county governments, municipal governments,
township governments, and special-district governments.
Employment is from the 1987 Census of Governments.37
The average budget is equal to total public (government)
spending on fire protection in 1989, $12.35 billion, divided
by the number of facilities.31 Public fire departments are
taxpayer-financed. It is not known whether i.hey tend to
operate at a surplus or deficit.
2.4.11 Corrections
Correctional facilities are offsite generators and are
therefore classified in Table 6C. The 1983 and 1984
Censuses by the Bureau of Justice Statistics reported that
there were 47 Federal facilities, 903 state facilities, and
3,338 local jails in the U.S.3' Local facilities are
operated by both county and municipal governments.
Employment is from the 1987 Census of Governments.
Revenue is calculated by applying the percentage of total
public spending on corrections accounted for by each level
of government, reported in the 1987 Census, to total public
spending on corrections in 1989, $24.4 billion, and dividing
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by the number of facilities.40 Any tendency for correctional
facilities to operate at a surplus or deficit is not known.
2.4.12 Commercial Incineration Facilities
By definition, commercial incineration facilities
operate an MWI. They are therefore included in Table 6B.
The number of facilities, 75, is based on 150 MWIs
nationwide, extrapolated "from data from 15 states (see the
Industry Profile Report, Section 6.3.5); and an estimated
two MWIs per facility. Survey responses from 15 commercial
incineration facilities were used to calculate average
revenue. Data were not available for other economic/
financial parameters.
3.0 ECONOMIC IMPACTS
3.1 METHODOLOGY AND OVERVIEW
The general methodology of the economic impact analysis
can be understood with the aid of the flow chart in Figure
1. The figure applies specifically to facilities with an
onsite MWI.
Two separate impact analyses are conducted: industry-
wide and per-facility. The linchpin for the industry-wide
analysis (Section 3.4) is calculating the "market price
increase." This represents the average industry-wide price
increase necessary to recover control costs. Because most,
if not all, of the regulated industries are fragmented,
actual price increases will vary from market segment to
market segment according to such factors as 1) the number of
facilities, 2) the number of facilities operating an MWI, 3)
the distribution of MWI types, and 4) market structure and
pricing mechanisms. Ideally, the average price increase in
each market segment would be measured. However, it is not
possible to define and characterize literally hundreds of
regional and local market segments. Therefore, the market
price increase, which is an average price increase across
all market segments, is used to represent the average price
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FIGURE 1. ECONOMIC IMPACT ANALYSIS METHODOLOGY
(FOR FACILITIES WITH AN ONSITE MWI)
Industry-wide
Analysis
Per-fscBity
Analysis
Estimate
price increase
required for
facility to
recover control
costs
\
Significantly
higher than
market price
increase?
Significant
impact of
control costs
on earnings?
-OR-
Capital
availability
problems?
Continue
onsite
Incineration
or substitute
(depending in
part on which
is lower-cost)
YM
Terminate
onsite
Incineration
is suosutution
f__.iU|_ __«•
feasible ana
cost-effective?
YES
\ '
Substitute
NO
Shut down
-------
increase in each individual market segment. All market
price increases in the analysis are under one percent and
are therefore considered to be achievable.
Based on the market price increase, the industry-wide
change in output is estimated. The change in output is
inversely related to the market price increase depending on
the price elasticity of demand, which is assessed in Section
3.2. Impacts on industry-wide employment and revenue are,
in turn, estimated from the change in output. No impacts on
industry-wide output, employment, or revenue are found to be
significant in the analysis.
The per-facility analysis (Sections 3.5 and 3.6) is
triggered by calculating the "facility price increase,"
which is the price increase necessary for individual model
facilities to recover control costs. The facility price
increase is then compared to the market price increase
(hence the industry-wide and per-facility analyses are
linked). If the facility price increase is not
significantly higher than the market price increase, it is
judged to be achievable (market structure is also considered
in this assessment). This is based on the premise that
facilities will be able to implement price increases that
are not far out of line with the average industry-wide price
increase. Of course, in some market segments, where the
average price increase is lower than the average industry-
wide price increase (because, for example, a large
proportion of facilities do not operate an MWI), it may be
more difficult than average to increase prices.
If the facility price increase is achievable, onsite
incineration can be continued. This does not rule out
substitution from occurring, however. Because the
comparative cost of onsite incineration increases as a
result of the NSPS, it may be possible after the regulation
to save costs by substituting (though cost is not the only
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consideration in choosing a medical waste treatment and
disposal method).
A number of cases in which the facility price increase
may not be achievable are identified in the analysis. These
cases include some categories of MWI operators and, because
the cost of commercial incineration increases as a result of
the NSPS, possibly also some facilities that send their
medical waste offsite to be incinerated. However, on
average, impacts are lower for facilities that send their
medical offsite to be incinerated than for MWI operators
because commercial MWIs are comparatively large and
efficient, and therefore have lower per-ton impacts from the
regulation.
For facilities that may not be able to achieve the
facility price increase, two questions are then asked: 1)
will absorbing the portion of control costs that cannot be
recovered through a price increase result in an
unsustainable decline in earnings?, and 2) will capital
generally be available to finance the investment in
pollution controls? If neither is a problem, onsite
incineration can be continued, though substitution may take
place, depending in part, on which is lower-cost.
If, on the other hand, earnings will be prohibitively
impacted or capital will be difficult to obtain, onsite
incineration will have to be terminated (or plans to invest
in a new MWI will have to be canceled). In this event,
substitution would be necessary in order to avoid closure —
or at least to avoid the termination of operations that
result in, or are dependent on, the generation of medical
waste. The analysis finds that, in general, substitution is
possible (both feasible and cost-effective) and closure can
be avoided. This is consistent with the fact that in all
industries in which medical waste is generated, the majority
of facilities already utilize an alternative to onsite
-41-
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incineration. Depending on particular conditions in
individual market segments, there may be a few exceptions in
which a facility would have to shut down, however.
3.2 PRICE ELASTICITY OF DEMAND
A key aim of the economic impact analysis is to
determine the ability of regulated establishments to pass
along control costs to their customers by increasing prices.
The extent to which this is possible without an attendant
decline in output depends greatly on the price elasticity of
demand.
The price elasticity of demand measures the percent
change in quantity demanded along the demand curve in
response to a percent change in price. The more inelastic
demand is, the greater is the ability of producers or
providers to increase prices without losing output.
Conversely, relatively elastic demand restricts the ability
to increase prices without losing output. The most
important determinants of demand elasticity are 1) the
availability and closeness of substitutes, 2) the extent to
which the product or service is a necessity, 3) the share of
the cost of the product or service in consumers' budgets,
and 4) the importance of price versus non-price attributes
of the product or service. Products or services without
close substitutes, which are relative necessities, which do
not constitute a significant share of consumers' budgets, or
which have important non-price attributes, all tend to have
relatively inelastic demand.
The import elasticity of supply can also be a
determinant of domestic price elasticity of demand. It is
not a factor in this study, however, because none of the
regulated industries face competition from abroad.
The majority of medical waste is generated by
industries involved in the provision of health care. In
general, the demand for health care is considered to be
-42-
-------
relatively inelastic. This would be represented by an
elasticity estimate between -1 and zero. One recent
estimate of the elasticity of demand for health care is
-0.47.41 This was said to fall "within the range of
elasticity estimates reported in several previous studies of
the demand for medical care."
The demand for health care is relatively inelastic for
several reasons. First, other than abstinence, there is no
substitute for health care. Secondly, good health is a
virtual necessity. As a result of these factors, consumers
are relatively captive to providers (e.g., physicians) and
often are given little choice in medical decisions. Another
factor is that health care providers tend to compete more on
quality (a non-price attribute) than price. Finally, and
perhaps most importantly, patients are to a great extent
insulated from changes in the price of health care because
medical bills are commonly paid by third parties such as
government programs (e.g., Medicare, Medicaid) and private
insurers. In 1987, third parties paid for 72.2 percent of
the cost of health care in the U.S.0
There are some offsetting factors. For one,
co-payments and deductibles on insurance plans still
constitute a significant share of consumers' budgets.
Further, health care providers have been meeting increased
resistance to price increases from third-party payers.
Finally, abstaining from health care is apparently an
option, as 37 million Americans are presently without health
insurance.43
Table 7 summarizes the elasticity estimates used in the
economic impact analysis. The estimates, which are
qualitatively derived, represent ranges, as follows:
-43-
-------
TABLE 7. ELASTICITY ESTIMATES
Price elasticity
of demand
Hospitals
Highly inelastic
Nursing homes
Moderately
inelastic
Physicians'
offices
Highly inelastic
Dentists'
offices
Moderately
inelastic
Major determinants
o 90.5 percent third-
party-financed (-)
o Primary health care a
virtual necessity (-)
o Compete more on quality
than price (-)
o Some competition from
outpatient facilities
o No close substitutes
(residential facilities
provide less/ inferior
care) (-)
o Quality and service, in
addition to price,
important (-)
o 49.3 percent direct
payment (+)
o For direct-payment
residents, significant
share of budget (+)
o Primary health care a
virtual necessity (-)
o 74.4 percent third-
party-financed (-)
o Patients very captive
(-)
o Quality important (-)
o Some competition from
ambulatory care (+)
o No close substitutes (-)
o Quality important (-)
o Non-preventive care a
virtual necessity (-)
o 61 percent direct pay-
ment (+)
o Significant share of
budget (+)
-44-
-------
TABLE 7. (Continued)
Price elasticity
of demand
Major determinants
Physicians'
clinics
Highly inelastic
Kidney
dialysis
facilities
Freestanding
blood banks
Veterinary
facilities
Research
laboratories
Medical
laboratories
Dental
laboratories
Highly inelastic
Highly inelastic
o Primary health care a
virtual necessity (-)
o 74.4 percent third-
party financed (-)
o Patients very captive
(-)
o Quality important (-)
o Some competition from
physicians' offices (+)
o Necessity (life-saving)
(-)
o No substitutes (-)
o Necessity (life-saving)
o Little latitude for
substitution (account
for 89% of all blood
collected in the U.S.)
(-)
o Only about 0.3 percent
of total health care
spending in the U.S.
Slightly inelastic o No close substitutes (-)
o Demand, especially for
pets, somewhat discre-
tionary (+)
o Significant share of
budget (+)
Slightly elastic o R&D often discretionary
Slightly elastic
Slightly inelastic o Face less competition
than medical labs (-)
o Competition from hos-
pitals, doctors' offices
-45-
-------
TABLE 7. (Continued)
Price elasticity
of demand
Manor determinants
Funeral homes Highly inelastic
o Compete on reputation,
not price (-)
o Death disposal an abso-
lute necessity (-)
o Competition from crema-
tories ( + )
o Necessary public good
o No substitutes (-)
Corrections Highly inelastic o Necessary public good
o No substitutes (-)
Fire and
rescue
Highly inelastic
-46-
-------
Elasticity Range
Highly inelastic 0 to -0.33
Moderately inelastic -0.33 to -0.67
Slightly inelastic -0.67 to -l.oo
Slightly elastic -1.00 to -1.33
Moderately elastic -1.33 to -1.67
Highly elastic less than -1.67
The major determinants in Table 7 are labeled "(-)" if they
contribute to relative inelasticity and "(+)" if they
contribute to relative elasticity.
3.3 INSTITUTIONAL CONSIDERATIONS
The ability of regulated establishments to recover
control costs by increasing prices will also be influenced
by certain institutional factors.
3-3-1 Health Care Providers Paid In Part Bv Third Parties
As we have seen, the demand for health care is
relatively inelastic, i.e., quantity demanded is not very
responsive to a change in price. This would normally imply
that prices can easily be raised to pass through a cost
increase to consumers (without a significant attendant
decline in output). In the health care sector, however,
willingness to pay does not always reflect underlying
demand. This is due to the role of third-party payers.
Since the implementation of the Prospective Payment System
(PPS) is 1983, reimbursement rates under Medicare, and even
more so under Medicaid, have fallen short of the costs of
providing health care. Lately, private third-party payers
have also increased their resistance to underwriting
increases in the cost of health care. The involvement of
third-party payers, therefore, is preventing health care
providers from recovering their costs, even though
underlying demand is relatively inelastic.
-47-
-------
This phenomenon is demonstrated in Figure 2. D is the
market demand curve and S is the initial short-run market
supply curve. The initial market equilibrium is point A,
with output of Qi and a price of Pj. As a result of control
costs, supply shifts to S'. If it were not for
institutional constraints, the new market equilibrium would
be point D. However, third-party payers, by limiting
reimbursement rates, constrain the price to P2. This is not
a market-clearing price, as the quantity demanded, Q2D,
exceeds the quantity that providers are willing to supply,
Q2S. This is a case of excess demand, represented by BC.
It would probably be evidenced by waiting lists for health
care.
One implication of this is that the price increase
necessary to recover control costs, no matter how small, may
not be achievable in the short run. Price may adjust only
to P2, not Ps, the price level necessary for the market to
clear in the short run. Another implication is that the
short-run impact of control costs on output *ay be more
pronounced than if the market were allowed to clear.
Instead of falling to Q3/ output may fall further to Q^.
The inability to recover control costs in the short run
due to institutional constraints may apply particularly to
1) nursing homes, which receive almost half of their funding
from Medicaid; 2) kidney dialysis facilities, which are
almost entirely dependent on Medicare for funding ($4
billion per year); 3) rural hospitals, which tend to have
older constituencies and are therefore especially reliant on
Medicare; and 4) inner-city hospitals, which serve
disproportionately poor populations and are therefore
relatively dependent on Medicaid.44
In the long run, in theory, excess demand is not
sustainable. Eventually, consumers would have to make it
clear to third-party payers (e.g., Medicare, Medicaid,
-48-
-------
FIGURE 2 THE EFFECTS OF INADEQUATE REIMBURSEMENT ( e.g., FROM MEDICARE)
OF INCREASED COSTS TO HEALTH CARE PROVIDERS
to
I
Price
— Short-run
institutional
ceiling
Quantity
-------
private insurers) that accessible health care is imperative.
Reimbursement rates would have to be adjusted to allow the
market to clear. Considering that since 1983 PPS has
consistently under-reimbursed health care providers,
however, it is not clear when the "long run" would take
effect. Nevertheless, in the long run, price and output
adjustments should more closely reflect underlying demand
than in the short run. Moreover, the extent to which short-
run price and output adjustments are derailed by
institutional barriers may not be that great, as third-party
reimbursements — particularly under PPS — though
deficient, still compensate the bulk of health care cost
increases.
3.3.2 Public and Not-For-Profit Establishments
Public (government) establishments may also be limited
— regardless of underlying demand — in their ability to
recover a cost increase. Public establishments often
produce public goods or provide public services that are
valuable socially but for whose production or provision the
marketplace would not reward private enterprise. Typically,
they are funded at least in part from tax revenues, which,
considering current government budget restrictions, may not
offer a lot of flexibility for passing along a cost
increase.
Not-for-profit establishments may face similar
limitations. This applies particularly to establishments
that, to meet their budget, are to some degree dependent on
such sources of funds as donations, grants, and fund-raising
proceeds. For example, the American Red Cross, which
collects half of the nation's blood supply, is currently
revamping its procedures and controls for collecting and
processing blood. It is estimated that this program will
cost $100 million. In addition to stepping up fund raising,
the Red Cross says it will have to borrow and cut other
-50-
-------
parts of its budget in order to pay for this.45 Therefore,
despite the underlying relatively inelastic demand for blood
(because it is a necessity), it is clear that the Red Cross
is restricted, at least in the short run, in its ability to
recover a cost increase. It is evidently not a matter of
simply increasing prices.
Several regulated industries or industry subcategories
may be particularly affected by this type of restriction.
These include public hospitals; blood banks, which are
not-for-profit; correctional facilities, vhich are public;
and fire and rescue operations, which are public. Public
hospitals, for example, typically rely on government
subsidies to offset operating deficits.4* In addition,
they tend to be located in areas (e.g., rural) with a high
percentage of uninsured patients.47
These industries or industry subcategories provide
services on which society is reliant. This is reflected in
relatively inelastic demand. In the short run, revenues
perhaps cannot be increased sufficiently in response to a
cost increase to reflect this demand. As a result, normal
profits will not be earned. Output will contract and there
will be excess demand. In the long run, the public should,
in theory, be forthcoming with more generous tax payments,
donations, grants, contributions to fund-raising drives,
etc. In reality, government budget restrictions and the
scarcity of funds for nonprofit uses may make it difficult
to fully recover costs even in the longer term.
Nevertheless, as in the case of inadequate reimbursement of
health care costs, while short-run price and output
adjustments may be distorted, in the long run these
adjustments should more closely reflect underlying demand.
-51-
-------
3.4 INDUSTRY-WIDE IMPACTS
3.4.1 Industry-wide Annualized Control Costs
Tables 8A and 8B present two alternative estimates of
net industry-wide annualized control costs, which are needed
to calculate industry-wide economic impacts. The two tables
differ in the way industry-wide annualized control costs, in
the first three columns, are calculated. In both cases,
industry-wide annualized control costs are calculated by
summing for each model combustor the product of the total
number of MWIs in the industry and per-MWI annualized
control costs. In addition, both cases accumulate the cost
impact of the NSPS on new sources and the cost impact of the
Emission Guidelines on existing sources (per-MWI control
costs for existing sources can be found in the Analysis of
Economic Impacts for Existing Sources, Table 3). However,
while industry-wide annualized control costs in Table 8A
assume the baseline (no control costs) for existing sources,
in Table SB it is assumed that the control stringency for
existing MWIs under the Emission Guidelines is the same as
for new MWIs under the NSPS. For existing sources,
therefore, Table 8A represents the case of minimum control
costs and Table 8B represents the case of maximum control
costs.
This approach recognizes that the NSPS and Emission
Guidelines are not independent. The two regulations impose
control costs on the same industries. As a result, the
control-cost impacts of the regulations are interdependent.
The effects of the NSPS on new sources are particularly
dependent on the effects of the Emission Guidelines on
existing sources because the number of existing sources
(4,850) is large in relation to the number of new sources
(702). There is double-counting involved in adding control
costs for new and existing sources because many new MWIs
will be replacement units, in which case control costs will
-52-
-------
IMIC M. CMOJlATia Of MT IKXKIIT-UIOC MMMllirg CrWIIOt COW: HIIINM COITMt C01II FO* KffTIK Hill
•-«U HUlf-
•mplUll
•urilnf hi»n
V.t.rln*ry fxlllll**
loboritorU.
Medic.l/dmt.l
rww.1 IMM
nnr.lcl.rn' .flic**
HnllM*' .ftlco« 1 clinic*
Outo.tl.mf c.ro
rrM.t.nrflno M**tf •»<••
fir* t tM«» *p*r.tl*n*
C*rr*ctl
•mu.ll ltd control
coot, ft th.ut.nrf) ,
C.0.2
V.122
1*2
110
101
2)1
12
44*
114
no
44
22
44
•
10
12.10*
C.O.I
41.0M
2.151
117
2.**1
1.0*4
M
2.00*
III
1.111
2*1
n
1*4
.
14*
11,474
C.0.4
0*.25*
4.010
1.0*1
l.tll
1.7)1
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051
2.17*
407
1*2
121
,
270
110.405
(n* c*ntr*l c**t<) f«r n
-------
IMlf 88.
Of WT IMUSIIT-WIDE ANMMUIfO CONTMl COSTS: WXIMJN COXTMK COSTS KM IXISTIK Mile
-••III Wilt--
...................
,„„,„„
•••»»••••
...............•••—• -
..............
•>••••••>•••••••••
•••••••»•»•
InrrMvntB
mmmmmmmmmmm
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'!"!"' IZi" rn.t. n.°trd ijrr»T»lor« (» thousand) tomwreUI co»U (» thouiond)
•••""•"
Noukl talo
•urelnf ha
Veterinary
net
facllltle*
lebereterlee
Camerclel reeeerck
Nedlcel/dentel
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rhyelclene
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in
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I
nee
• office*
efflcee t cllnlce
cere
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C.0.2
TtS 19$
8.177
8.112
10.858
0
0
a
0
0
0
0
Cerrectlenel fecllltles I
Other
letal
• ••••••Ml
Ircln. fee.
15,295
0
111.837
\w \wvw9m
C.O.I
262.686
29.644
29.875
37.095
0
0
0
0
0
0
0
0
51.696
0
410.996
f.,0.4 •'»» gm»r«tor« C.O.2 C.O.I C.O.*
519,102 10* 7.*70 26,769 53.910
64.16* 10X 818 2,964 4,616
40 )44 10X 831 2,988 6,855
74.711 10X 1,086 1.710 7.671
0
0
0
0
0
0
0
0
76,88* 100X " 15.795 51.696 74.88*
127 *09 75.6*9 87,626 151.937
coil pool
57.B7X
8.55X
1.34X
2.15X
5.23X
0.27X
10.*5X
2.58X
7.78X
1.*7X
0.*9X
0.98X
O.OOX
O.B*X
100. OCX
°" e.o.2
1*,8*1
2.191
1**
1.3*1
69
2.680
662
1.996
177
126
251
0
215
25.6*9
C.O.I
50.709
7.*92
1.174
1.884
4.583
237
»,157
2.261
6.817
1,288
429
859
0
716
87.626
C.0.4
87.926
12.991
2,0)6
1.267
7.9*6
410
15.877
3.920
11.821
2.213
744
1.489
•
1.276
151.917
•et
IndMtry-Hldt
emuollird control
co*U (* thouund)
C.0.2
81.419
7.824
10.124
1.1*1
69
2.680
662
1.996
177
126
251
0
215
118.817
C.O.)
287.127
14.172
28.062
35.269
4.581
2)7
9.157
2.261
6.817
1.288
429
859
0
716
410.996
C.0.4
571.117
72.5)8
61.727
72.308
7.9*6
410
15.877
1.920
11.821
2.211
7*4
1.489
0
1.276
827.409
'«»UM the MM control .trimmer for o.l.ttm MIU infer the t.l.ilon Guidelines n lor no Milt wider the «PS.
-------
probably not be incurred under the Emission Guidelines.
This may lead to an overstatement of industry-wide
annualized control costs in Table 8B (though not in Table
8A, since no control costs are attributed to existing
sources). This will yield conservative impacts.
In contrast, in the Analysis of Economic Impacts for
Existing Sources, the effects of the NSPS on new sources are
not considered in assessing the effects of the Emission
Guidelines on existing sources. This is because the number
of new sources is small in relation to the number of
existing sources. The influence of the NSPS on the impacts
of the Emission Guidelines is likely to be minimal,
especially considering that many new MWIs are replacement
units. Moreover, while the impacts of the Emission
Guidelines will certainly not be immediate, on average they
are likely to take effect before the impacts of the NSPS,
which applies to future MWIs. As a result, while the
Emission Guidelines have cumulative effects that can be
considered in assessing the effects of the NSPS, the NSPS
does not have cumulative effects that can be considered in
assessing the effects of the Emission Guidelines.
Note in Tables 8A and 8B that there are no industry-
wide annualized control costs for industries in which no
MWIs are operated. The tables proceed to recognize,
however, that control costs attributable to capacity that is
used to incinerate other generators' medical wastes (i.e.,
used for commercial incineration) will be passed along to
these offsite generators.
This is accomplished in a two-step process. In the
first step, annualized control costs attributable to
capacity used for commercial incineration are estimated and
aggregated in a "commercial incineration cost pool." In the
short run, under perfect competition, only marginal costs
would be passed along to offsite generators. In the long
-55-
-------
run, however, all costs are variable. Therefore, it is
assumed that annualized control costs associated with
capacity used for commercial incineration are fully passed
along to offsite generators. The portion of annualized
control costs that is passed along depends on the fraction
of MWI capacity used to incinerate waste generated offsite.
By definition, 100 percent of the MWI capacity of commercial
incineration facilities is used by offsite generators. For
hospitals, nursing homes, veterinary facilities, and
research laboratories, it is assumed that 10 percent of MWI
capacity is used by offsite generators. This estimate may
be high. However, this is preferred so that impacts
calculated for offsite generators will be conservative.
The commercial incineration cost pool is derived by
summing annualized control costs passed along to offsite
generators in each industry. The result in Table 8A is $4.5
million under Control Option 2, $20.0 million under Control
Option 3, and $33.1 million under Control Option 4. The
result in Table 8B is $25.6 million under Control Option 2,
$87.6 million under Control Option 3, and $151.9 million
under Control Option 4.
The second step is to allocate the commercial
incineration cost pool to offsite generators. Ideally, this
would be done according to the share of total medical waste
incinerated offsite. This information is not available,
however. Instead, the share of total medical waste
generated and not incinerated onsite is estimated and used
as a proxy. This is done assuming that the amount of total
industry medical waste generated that is not incinerated
onsite is in proportion to the fraction of facilities in the
industry that do not operate an existing MWI. For example,
an estimated 54.2 percent of all hospitals do not operate an
existing MWI (this can be derived from the number of
existing MWls, reported in Table 3, and the number of
-56-
-------
facilities, reported in Table 5). Therefore, it is assumed
that 54.2 percent of total medical waste generated by
hospitals is not incinerated onsite.
This methodology results in the industry shares of the
commercial incineration cost pool shown in Tables 8A and 8B.
Even though almost half of all hospitals operate an existing
MWI, the hospital category is still estimated to account for
over half (57.87%) of all medical waste incinerated offsite.
Physicians' offices have the second largest share — 10.45
percent. Commercial incineration facilities have no share
of the commercial incineration cost pool because they do not
generate medical waste.
Applying these shares to the commercial incineration
cost pool, incremental offsite incineration costs are
calculated for each industry in Tables 8A and 8B. Net
industry-wide annualized control costs can now be estimated
as industry-wide annualized control costs, minus control
costs passed along by MWI operators to offsite generators,
plus incremental offsite incineration costs incurred by
offsite generators. Net industry-wide annualized control
costs are shown in the last three columns of Tables 8A and
8B. It is interesting to note that despite the comparative
prevalence of MWIs at hospitals, net industry-wide
annualized control costs are higher for hospitals than
industry-wide annualized control costs. This is because the
hospital industry is estimated to generate more medical
waste that is incinerated offsite than it incinerates
commercially on behalf of offsite generators.
3.4.2 Financial/Economic Inputs
Financial/economic data are also needed for the
analysis of industry-wide economic impacts. These inputs
are presented in Table 9. Revenue and employment are
aggregated from the model facility data in Tables 6A, 6B,
and 6C. The price elasticities of demand are from Table 7.
-57-
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TABLE 9. FINANCIAL/ECONOMIC INPUTS FOR THE INDUSTRY-WIDE ECONOMIC IMPACT ANALYSIS
Hospitals
Nursing homes
Veterinary facilities
Laboratories
Commercial research
Medical /dental
Funeral homes
Physicians' offices
Dentists' offices I clinics
Outpatient care
Freestanding blood banks
Fire t rescue operations
Correctional facilities
Commercial incineration fac.
Total
Industry
revenue
(S million)
223.665
32,137
7.422
11,847
7.6*0
9.900
95,295
27,406
15,008
1,239
12,348
24,245
150
468,302
Industry
employment
a
3,957.150
1.332,608
103,887
137,517
132,031
154,000
1,032,901
492,742
202,011
13,298
29,542
424,397
N/A
8,012,084
Price elasticity
of demand
Max.
•0.33
•0.67
-1.00
•1.33
•1.33
•0.33
•0.33
•0.67
•0.33
•0.33
•0.33
•0.33
N.E.
Min.
0.00
-0.33
-0.67
-1.00
•0.67
0.00
0.00
-0.33
0.00
0.00
0.00
0.00
N.E.
FulI-time-equivalent
N/A Not available.
N.E. Not estimated.
-------
Revenue and employment in Table 9 are 1989 data. This
is the appropriate year for measuring economic impacts —
even though the NSPS applies to new MWIs (i.e., MWIs in the
future) — because control costs are in 1989 dollars. It is
implicitly assumed that control costs and the financial/
economic inputs will increase at the same rate (i.e., will
retain the same proportions) in the next five years.
3.4.3 Commercial Incineration
Note in Table 9 that the price elasticity of demand has
not been estimated for commercial incineration facilities.
Due to the limited number of medical waste treatment and
disposal options, the demand for commercial incineration is
probably relatively inelastic. However, specifying a price
elasticity of demand for commercial incineration will not
indicate the impact of the NSPS on the output of commercial
incineration facilities because output will also be
influenced by the effect of the regulation on the demand for
offsite incineration. On the one hand, through a shift in
supply, control costs will result in a decrease in quantity
demanded and therefore a decrease in output, to the extent
that demand is not perfectly inelastic. On the other hand,
because offsite incineration is a substitute for onsite
incineration, the increase in the cost of onsite
incineration resulting from the NSPS will cause an increase
in the demand for offsite incineration. Through a shift in
demand, this will produce an increase in quantity supplied
and an increase in output, to the extent that supply is not
perfectly inelastic.
The countervailing effects that control costs and an
increase in the demand for offsite incineration have on
commercial incineration output are demonstrated in Figure 3.
The initial market supply curve is S and the initial market
demand curve is D, with an equilibrium quantity of Q.
Control costs cause supply to shift to S'. With no change
-59-
-------
FIGURE 3. ALTERNATIVE QUANTITY IMPACTS FOR
COMMERCIAL INCINERATION FACILITIES
Price
CD
I
Quantity
-------
in demand, this would cause quantity to decrease from Q to
Q'. However, demand increases, with a counter effect on
quantity. If demand shifts to D',, the new equilibrium
quantity is Q',, which is less than Q. On the other hand,
if demand shifts to D'2, the new equilibrium is Q'2. In this
case, quantity has increased.
The comparative strengths of these countervailing
supply and demand effects will determine the impact of the
NSPS on the output of commercial incineration facilities.
If the impact is negative (i.e., output declines, or the
rate of growth in output is retarded), it is likely to be
shared across the country by a number of commercial
incineration facilities because the commercial incineration
market is effectively regionalized by transportation cost
differentials. In general, to the extent that a market is
fragmented (e.g., regionalized), an industry-wide decrease
in output will not require restructuring (e.g., closures),
but rather will be brought about by a number of marginal
facilities reducing their capacity utilization.
This can be understood from the following example.
Consider an industry with 100 firms, all of the same size
(i.e., all with a 1% market share). If the industry is not
fragmented (i.e., the market is nationwide), in theory a one
percent decrease in industry-wide output would be brought
about by a 100 percent decrease in the output of one firm —
the marginal firm, This implies that the marginal firm
would have to shut down. Suppose, in contrast, that the
industry is fragmented into 25 market segments —
distinguished by locality or region, for example — each
consisting of four firms. Because these market segments are
independent (i.e., firms do not compete with firms in other
market segments), a one percent decrease in industry-wide
output would be brought about by a one percent decrease in
output in each individual market segment. This would
-61-
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require output of the marginal firm in each market segment
to decline by only four percent, which does not necessarily
imply closure.
Consequently/ no commercial incineration facilities
would be likely to have to shut down or cancel plans to
invest in a new MWI. Another mitigating factor is that if
commercial incineration output is negatively impacted by the
NSPS, commercial autoclaving is likely to benefit. Some
commercial waste management companies offer both
incineration and autoclaving. These types of commercial
facilities might only experience a shift in sales from
incineration to autoclaving. This may also suggest that
commercial facilities dependent on incineration have the
flexibility to branch into autoclaving if necessary.
However, the presumption of this analysis is that the
demand for commercial incineration will increase to offset
the impact on output of control costs. Already, commercial
incineration capacity is tight in the face of rapidly
growing demand. The NSPS will give impetus to this demand
growth, as onsite incineration becomes more expensive.
Given these forces, a contraction of industry output, or a
contraction in the rate of growth of industry output, is
unlikely.
If the output of commercial incineration facilities is
not negatively impacted by the NSPS, one implication is that
prices will be raised to fully recover control costs. This
is because profitability will have to be undiminished
(implying full recovery of control costs) in order for
regulated facilities to have the incentive to maintain their
level of output (or rate of growth in output). This can
also be understood with reference to Figure 3. If demand
shifts to exactly offset the effect on output of the shift
in supply, leaving output unchanged, the change in price
(per unit of output) will equal the per-unit control cost,
-62-
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represented by the vertical distance between S and S'.
Since the per-unit changes in price and cost are the same,
control costs are fully recovered.
3.4.4 Market Price Increase
Regulated facilities would ideally like to pass along
control costs to their customers by increasing prices. The
market price increase is defined as the average industry-
wide price increase (i.e., increase in the revenue basis)
necessary to recover control costs. It is calculated in
Table 10 as the ratio of net industry-wide annualized
control costs to revenue.
Because most, if not all, of the regulated industries
are fragmented, actual price increases will vary from market
segment to market segment according to such factors as 1)
the number of facilities, 2) the number of facilities
operating an MWI, 3) the distribution of MWI types, and 4)
market structure and pricing mechanisms. Ideally, the
average price increase in each market segment would be
measured. However, it is not possible to define and
characterize literally hundreds of regional and local market
segments. Therefore, the market price increase, which is an
average price increase across all market segments, is used
to represent the average price increase in each individual
narket segment.
As an average, the market price increase also 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
operators of new MWls and offsite generators. On average,
offsite generators will require a lower price increase to
recover control costs (passed along from commercial MWls)
than new-MWI operators. This is because 1) the average
offsite generator is less dependent on offsite incineration
-63-
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TABLE 10. NET INDUSTRY-WIDE ANNUALJZEO CONTROL COSTS AS A PERCENT OF REVENUE/BUDGET
—NEW MVIS--
Minimum control costs for
existing MUls
Industry
Hospitals
Nursing homes
Veterinary facilities
Laboratories
Commercial research
Medical/dental
Funeral homes
Physicians' offices
Dentists' offices I clinics
Outpatient care
Freestanding blood banks
Fire 1 rescue operations
Correctional facilities
C.0.2
O.OMX
0.002X
0.001X
0.005X
0.003X
O.OOCX
o.ooox
o.ooox
0.0022
0.005X
O.OOOX
o.ooox
C.0.3
0.020X
0.008X
o.oon
0.023X
o.oux
0.001X
0.002X
0.002X
0.010X
0.024X
0.001X
0.001X
C.0.4
0.040X
0.015X
0.015X
O.M6X
0.023X
0.001X
0.004X
0.003X
0.017X
0.039X
o.oou
0.001X
Naxinun control costs for
existing NUIs
C.0.2
0.037X
0.030X
0.105X
0.087X
0.018X
O.OOU
0.003X
0.002X
0.013X
0.030X
0.001X
o.oon
C.0.3
0.128X
0.106X
0.376X
0.298X
0.060X
0.002X
0.010X
o.ooex
0.045X
0.1WX
0.003X
O.OOCX
C.0.4
0.256X
0.226X
0.859X
0.61 OX
O.lOiX
0.004X
0.017X
O.OUX
0.079X
0.180X
0.006X
0.006X
-64-
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than the average MWI operator is dependent on onsite
incineration; and 2} MWIs used for commercial incineration
are larger than average, and therefore have relatively low
control costs per ton. Among offsite generators, the price
increase necessary to recover control costs will vary with
the degree of dependence on offsite incineration.
In the case of minimum control costs for existing MWIs,
the market price increases in Table 10 range up to 0.046
percent for commercial research labs under Control Option 4.
In the case of maximum control costs for existing MWIs, the
market price increases range up to 0.859 percent for
veterinary facilities under Control Option 4. Since all
market price increases are under 1 percent, they are
considered to be achievable. Due to institutional
constraints, it may require some time for the price
increases to be fully implemented, however. The low values
reflect in part that in all industry categories, the
majority of facilities do not operate an MWI (new or
existing). Commercial incineration facilities (all of
which, by definition, operate an MWI) are not included in
Table 10 because they were defined in Tables 8A and 8B as
having no net annualized control costs.
3.4.5 Consequences of the Market Price Increase
The market price increase will result in changes in
output, revenue, and employment, depending on demand
elasticity. For modified MWIs and newly built MWIs
resulting from either replacing an existing MWI or switching
from an alternative medical waste treatment method, the
impacts involve potential changes in the existing levels of
output, revenue, and employment. For newly built MWIs
resulting from industry growth, the impacts involve
potential changes in the rate of growth in output, revenue,
and employment.
-65-
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In response to the market price increase, output will
decrease (or decelerate, in the case of newly built MWIs
resulting from industry growth) unless demand is perfectly
inelastic. (For health care industries, output is the level
of service provided, such as the number of patients
admitted, or the number of operations performed.) Revenue
will change in response to the market price increase if the
demand elasticity is not unitary (i.e., equal to -1). It
will increase if demand is relatively inelastic and decrease
if demand is relatively elastic. It can be assumed that
employment will decrease if output decreases.
3.4.5.1 nntput Impacts. Table 11 shows the industry-
wide percent change in output in response to the market
price increase based on maximum control costs for existing
MWIs. This results in maximum output impacts. The
calculations follow from the specification of a constant-
elasticity demand function:
where, QD - quantity demanded
a = a constant
p = price
c = price elasticity of demand
This function is an arc that is asymptotic to the origin.
It assures that elasticity does not change over the range of
the market price increase. Alternatively, it can be viewed
to allow the elasticities specified in Table 7 to be
averages over the range of the market price increase.
The demand function can be used to solve for the
percent change in output (%AQ) :
-66-
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TABLE 11. INDUSTRY-WIDE OUTPUT IMPACTS OF THE MARKET PRICE INCREASE
-•NEW MWIs--
Price elasticity
of demand
Industry
Hospitals
Nursing homes
Veterinary facilities
Laboratories
Commercial research
Medical/dental
Funeral homes
Physicians' offices
Dentists' offices & clinics
Outpatient care
Freestanding blood banks
Fire £ rescue operations
Correctional facilities
Nax.
-0
-0
-1
-1
•1
-0
-0
•0
-0
-0
•0
•0
.33
.67
.00
.33
.33
.33
.33
.67
.33
.33
.33
.33
Min.
0
•0
-0
•1
•0
0
0
-0
0
0
0
0
.00
.33
.67
.00
.67
.00
.00
.33
.00
.00
.00
.00
Percent change in output
Max. elasticity
C
-0
•0
-0
-0
•0
0
•0
•0
•0
•0
0
0
.0.2
.012X
.020X
.10SX
.116X
.023X
.ooox
.001X
.002X
.004X
.01 OX
.OOOX
.ooox
C.0.3
-0.042X
•0.071X
-0.377X
•0.395X
•0.080X
•0.001X
-0.003X
•0.006X
•0.015X
•0.034X
•0.001X
•0.001X
C.0.4
-0.084X
•0.151X
•0.8S1X
-0.606X
•0.138X
-0.001X
•0.005X
•0.010X
•0.026X
-0.059X
•0.002X
-0.002X
Min. elasticity
C.0.2
o.ooox
-0.010X
•0.071X
•0.087X
-0.012X
O.OOOX
O.OOOX
•0.001X
O.OOOX
O.OOOX
O.OOOX
O.OOOX
C.0.3
O.OOOX
-0.03SX
•0.253X
-0.297X
•0.040X
O.OOOX
O.OOOX
•0.003X
O.OOOX
O.OOOX
O.OOOX
O.OOOX
c.o.
o.oc
-0.07
•0.57
•0.60
•0.07
0.00
O.OO:
•0.00!
0.00:
0.00
0.00:
O.OC
Based on maxinun control costs for existing
-67-
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aP2* - aP*
*Pl
Pi - Pi
Pi
PJ(1*%AP)'
The output impacts in Table 11 are obtained by setting
%AP equal to the market price increase. The percent change
in output and the percent change in price are inversely
related because the demand curve is downward-sloping. This
inverse relationship is imparted to the equation for %AQ by
e's negative coefficient.
Owing to a small market price increase and/or
relatively inelastic demand, none of the impacts in Table 11
are significant. All are less than one percent. The
biggest impact is -0.851 percent, registered by veterinary
facilities in the case of the maximum elasticity under
Control Option 4. The impact on hospitals ranges up to
-0.084 percent in the case of the maximum elasticity under
Control Option 4.
With the possible exception of commercial research
labs, all of the regulated industries are fragmented because
-68-
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they are regionalized or localized. The typical community
hospital (that is, one that is not specialized), for
example, does not compete with hospitals outside of its
locality or region. Consequently, the output impacts in
Table 11 will not require any industries to be restructured
(e.g., through closures or consolidations), but rather will
be brought about by declines in capacity utilization that
will be shared by a number of facilities (in theory, the
marginal facilities, i.e., the facilities with the highest
average costs). The rationale for this was discussed in
Section 3.4.3.
Capacity utilization in the U.S. hospital industry is
already quite low (the average occupancy rate of hospitals
registered with the American Hospital Association declined
from 77.7% in 1980 to 69.2% in 1988) .** But the impact of a
0.084 percent decrease in industry-wide output (Control
Option 4, maximum elasticity) on capacity utilization would
be insignificant.
Although the industry-wide output impact on commercial
research labs — which may not be a fragmented market —
ranges up to -0.806 percent in the case of the maximum
elasticity under Control Option 4, this, too, would not be
sufficient to cause the industry to restructure.
3.4.5.2 Employment and Revenue Impacts. The impact of
the market price increase on industry-wide employment,
assuming that employment is proportionate to output (i.e.,
fixed labor-output ratio), is calculated in Table 12.
Again, the conservative market price increase based on
maximum control costs for existing sources is used. The
biggest employment decreases are registered by hospitals and
nursing homes. As a percent of baseline employment (see
Table 9), however, these impacts are snail. In the case of
the maximum elasticity under Control Option 4, employment
-69-
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TABLE 12. INDUSTRY-WIDE EMPLOYMENT IMPACTS OF THE MARKET PRICE INCREASE
••New MWIs —
Industry
Hospitals
Nursing homes
Veterinary facilities
Laboratories
Commercial research
Medical/dental
Funeral homes
Physicians' offices
Dentists' offices ( clinics
Outpatient care
Freestanding blood banks
Fire & rescue operations
Correctional facilities
Price tlasticity
of demand
Max.
•0.33
•0.67
•1.00
•1.33
•1.33
•0.33
•0.33
•0.67
•0.33
•0.33
•0.33
•0.33
Min.
0.00
•0.33
•0.67
•1.00
•0.67
0.00
0.00
•0.33
0.00
0.00
0.00
0.00
Change in
Max. elasticity
C.0.2
(487)
(265)
(109)
(159)
(31)
(0)
(10)
(8)
(9)
(1)
(0)
(1)
C.0.3
(1,675)
(949)
(391)
(543)
(105)
(1)
(33)
(27)
(30)
(5)
(0)
(5)
C.0.4
(3,340)
(2,012)
.(884)
(1.108)
(182)
(2)
(57)
(47)
(52)
(8)
(1)
(9)
employment
Nin. elasticity
C.0.2
0
(131)
(73)
(120)
(16)
0
0
(4)
0
0
0
0
C.0.3
0
(467)
(262)
(408)
(53)
0
0
(13)
0
0
0
0
C.0.4
0
(991)
(593)
(834)
(92)
0
0
(23)
0
0
0
0
Based on maximm control costs for existing MUls.
-70-
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declines by 0.084 percent at hospitals and by 0.151 percent
at nursing homes (by definition, these are the same as the
output impacts in Table 11). Because all of the regulated
industries are geographically dispersed, the employment
impacts will not be felt in any one particular region of the
country.
Table 12 does not account for some potential employment
effects of the NSPS that are positive. For example,
employment related to the production of pollution control
equipment should increase. In addition, additional people
will be needed to give training to MWI operators. Further,
there should be an increase in employment related to the
production and operation of autoclave systems and MWIs used
for commercial incineration.
Revenue impacts resulting from the market price
increase based on maximum control costs for existing MWIs
are stated in Table 13. The percent change in revenue is
equal to the sum of the percent change in price (market
price increase) and the percent change in output, plus their
cross-product. Revenue increases in response to a price
increase if demand is relatively inelastic, and decreases if
demand is relatively elastic. It does not change if the
elasticity is unitary (e » -1).
Revenue decreases only at commercial research labs and
medical/dental labs in the case of the maximum elasticity.
In all other cases, revenue increases because demand is
relatively inelastic or does not change because demand is
unitary-elastic. Relative to the baseline, the decrease in
revenue in the case of the maximum elasticity under Control
Option 4 is only 0.20 percent at commercial research labs
and 0.03 percent at medical/dental labs. Not only are these
impacts small, but they also will not entirely impact the
bottom line (i.e., net income) because they will be at least
-71-
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TABLE 13. INDUSTRY-WIDE REVENUE/BUDGET IMPACTS
••MEW HWIS—
OF THE MARKET PRICE INCREASE
Price elasticity
of demand
Industry
Hospitals
Nursing homes
Veterinary facilities
Laboratories
Commercial research
Medical /dental
Funeral homes
Physicians' offices
Dentists' offices t clinics
Outpatient care
Freestanding blood banks
*ire i rescue operations
Correctional facilities
Max.
-0
•0
-1
-1
-1
-0
-0
•0
-0
-0
•0
-0
.33
.67
.00
.33
.33
.33
.33
.67
.33
.33
.33
.33
Min.
0
•0
-0
•1
•0
0
0
•0
0
0
0
0
.00
.33
.67
.00
.67
.00
.00
.33
.00
.00
.00
.00
Change in revenue/budget ($ thousand)
Max. elasticity
C.0.2
$55.887
$3,152
$0
($3,405)
($443)
$46
$1,796
$218
$1,337
$253
$&4
$168
C.0.3
$192,334
$11,273
$0
($11,616)
($1,512)
$159
$6,135
$746
$4,567
$663
$288
$575
C.0.4
$383,827
$23,920
$0
($23,765)
($2.620)
$275
$10.638
$1,294
$7,919
$1,496
$499
$998
Min
C.0.2
. elasticity
C.0.3
C.O.
$83,419 $287. 127 $573.1
$6,400
$2,581
($0)
$443
$69
$2,680
$443
$1,996
$377
$126
$251
$22,891
$9,249
($0)
$1,512
$237
$9,157
$1,515
$6,817
$1,288
$429
$859
$48,5
$20,9'
$2,6
$4
$15,8
$2.6
$11,8
$2,2
$7
$1.4
a
ssd on maxinun control costs for existing MUls.
-72-
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partially offset by variable costs that decrease along with
the decrease in output.
3.5 PER-FACILITY IMPACTS FOR MWI OPERATORS
3.5.1 Linking Control Costs to Model Facilities
Control costs for the model combustors were presented
in Table 4. In order to estimate economic impacts on
facilities that will operate a new MWI, it is necessary to
link the control costs to the model facilities defined in
Tables 6A and 6B. This is accomplished by assigning model
combustors to model facilities.
The assignment scheme reflects that, generally, larger
MWIs are expected to be located at larger facilities.
Six model combustors — the Intermittent 21,000,
Continuous 24,000, Intermittent 8,400, Pathological 2,000,
Intermittent 2,000, and Batch 250 — are attributed to
hospitals in Table 2. Hospital subcategories in which the
average number of beds is 300 or greater are assigned the
two largest MWIs, the Intermittent 21,000 and Continuous
24,000. Hospitals with 100-299 beds are assigned the next-
largest MWI, the Intermittent 8,400. This includes "Total"
and the urban hospitals subcategory. Hospitals with 50-99
beds — including the rural hospitals subcategory ~ are
assigned the two next-largest MWIs, the Pathological 2,000
and Intermittent 2,000. Hospitals with fewer than 50 beds
are assigned the smallest MWI, the Batch 250.
Two intermittent MWIs, the Intermittent 8,400 and
Intermittent 2,000, are attributed to nursing homes in Table
2. A "composite" of these two MWIs is assigned to nursing
homes with 100+ employees, the only subcategory in which
MWIs are operated. The composite is a weighted average of
the two MWIs based on their representation in the projected
nationwide population of new MWIs at nursing homes (as
indicated in Table 2, 1 Intermittent 8,400 and 17
-73-
-------
Intermittent 2,000s). The composite is not an actual MWI.
Rather, it is intended to represent a typical MWI used by
nursing homes with 100+ employees.
The two model combustors attributed to veterinary
facilities in Table 2, the Pathological 2,000 and
Intermittent 2,000, are similar in size. Therefore, both
are assigned to the two subcategories of veterinary
facilities in which MWIs are operated — 10-19 employees and
20+ employees.
Tax-paying commercial research labs with 100+ employees
(they average 356.9 employees) are assigned the Intermittent
21,000 and Continuous 24,000. Tax-exempt commercial
research labs (they average 147.7 employees) are assigned
the Intermittent 8,400. Tax-paying commercial research labs
with 20-99 employees are assigned the Pathological 2,000 and
Intermittent 2,000.
Finally, the only model combustor attributed to
commercial incineration facilities in Table 2 is the
Continuous 36,000. Survey responses from 15 commercial
incineration facilities indicated that the average facility
operates about two MWIs. Therefore, commercial incineration
facilities are assigned two Continuous 36,000s
(alternatively, control costs for the Continuous 36,000 are
multiplied by two). In all other industry categories there
is typically only one MWI per facility (though there are
exceptions), so model combustors are assigned to model
facilities on a one-to-one basis.
By linking the control costs in Table 4 directly to
model facilities, it is assumed that no portion of control
costs is passed along to offsite generators. This deviates
from the methodology used to estimate industry-wide control
costs in Section 3.4.1. Nevertheless, this approach is
taken because many MWI operators, no doubt, do not use any
of their capacity to incinerate waste generated offsite.
-74-
-------
The impacts of controls on these MWI operators would be lost
if control costs were uniformly reduced to reflect
commercial incineration cost sharing. Therefore, the per-
facility economic impacts on MWI operators should be
regarded to apply to facilities that do not incinerate
commercially and therefore will not share control costs with
offsite generators. Impacts will be overstated
(conservative) for facilities that do incinerate
commercially and share control costs with offsite
generators.
Per-facility control costs are summarized in Tables 14
and 15. Table 14 shows capital control costs and Table 15
shows annualized control costs. These costs are used for
the calculation of all impacts in this section. Note that
the costs for commercial incineration facilities are double
the costs of the Continuous 36,000 in Table 4 because there
are two units per facility.
3.5.2 Facility Price Increase
The facility price increase is defined as the price
increase necessary for an individual facility to fully
recover control costs. It is distinguished from the market
price increase, which is the average industry-wide price
increase necessary to recover control costs. Because
offsite generators are on average impacted less by the NSPS
than MWI operators, the facility price increase calculated
for KWI operators in industries in which there are also some
offsite generators will exceed the market price increase.
To the extent that an industry is competitive,
individual firms are constrained to institute price
increases that are not far out of line with the market price
increase. Under perfect competition, for example, where all
firms are price-takers, an attempt by a firm to increase
prices above the prices of its competitors would result in
-75-
-------
TABLE 1*. CAPITAL CONTROL COSTS FOR MODEL FAC1LITIES(1989 DOLLARS)
--NEW MUls--
Intermittent MUI Batch MUI Continuous MUI Pathological MUI
industry/subcate-ory C.0.2 C.0.3 C.0.4 C.0.2 C.0.3 C.0.4 C.0.2 C.0.3 C.0.4 C.0.2 C.0.3 C.0.4
Hospitals
300* beds 70.207 355,153 795.268 53,008 285,274 675,575
100-299 beds 39,244 229.352 579,543
50-99 bed, 25.480 173.430 482.992 ".'3* ™.™ **».*28
<50beds 23.544 165,567 469.312
Nursing homes 26.245 176.537 488.356
Veterinary facltItle. 25.480 173.430 482,992 2*.'34 177,714 490.428
Research laboratories
' Tax-paying
o> 100* emp. 70.207 355.153 795.268 53.008 285.27* 675,575
20-99 emp. 25.480 173.430 482.992 ».53« 177,714 490.428
Tax-exempt 39,244 229.352 579.543
Commercial Incineration fac. 1*0.414 710.306 1.590.536
-------
Industry/subcategory
YABLE V,. ANNUAL I ZED CONTROL COSTS fOR MODEL ?ACILIT!ES(1V89 DOLLARS)
--MEU HUls--
Intermittent MVIJ Batch HUI Continuous NUI Pathological Mil
C.0.2 C.0.3 C.0.4 C.0.2 C.0.3 C.0.4 C.0.2 C.0.3 C.0.4 C.0.2 C.0.3 C.0.4
Hospitals
300* beds
100-299 beds
50-99 beds
.
20-99 ««$>.
Tax-exempt
Commercial Incineration fac.
36,695 1*6.992 247.958
17,921 81,968 163.047
9.301 50,581 120,883
9.780 52,325 123,225
9.301 50,581 120.883
36.695 146,992 247,958
9,301 50,581 120.883
17,921 81,968 163.047
9.567 46.471 115.247
30,043 114.809 202.891
30.043 114.809 202.891
94.712 415.428 637,342
8,200 46,669 116,127
8.200 46,669 116,127
8,200 46,669 116.127
-------
the loss of all output. The achievability of the facility
price increase depends on how much it deviates from the
market price increase, as well as on market structure.
In Table 10 it was seen that the market price increase
based on maximum control costs for existing MWIs is higher
across-the-board than the market price increase based on
minimum control costs for existing MWIs. Consequently, the
facility price increase will always deviate more from the
market price increase based on minimum control costs for
existing MWIs than from the market price increase based on
maximum control costs for existing MWIs. This reflects that
it will be easier for operators of new MWIs to recover
control costs with a price increase if operators of existing
MWIs are similarly controlled.
The facility price increase is calculated as the ratio
of annualized control costs to revenue for hospitals in
Table 16A and for other MWI operators in Table 16B.
3.5.2.1 Hospitals. The average facility price
increase for all hospitals ("Total") is 0.06 percent under
Control Option 2, 0.25 percent under Control Option 3, and
0.50 percent under Control Option 4. The latter amount
represents only 5.2 percent of the 9.7 percent average
annual increase in hospital spending in the U.S. from 1980
to 1987.49
Even though model combustors have been assigned to
model facilities in relation to size, it is evident that
larger hospitals have economies of scale. Under Control
Option 4, for example, while the average facility price
increase for all hospitals with 300+ beds ranges from 0.20
percent (Continuous 24,000) to 0.24 percent (Intermittent
21,000), the average facility price increase for all
hospitals with fewer than 50 beds is 2.89 percent (Batch
250). The facility price increase ranges from 0.03 percent
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TABLE 16*. PER-FACILITY ANMUALIZED CONTROL COSTS AS A PERCENT OF REVENUE : HOSPITALS
••MEW HWIs-
ZZCZ«ZZZZCZZZZZZZZZX«ZZZZZZZ»ZECXZBSZUCZZZZZZCZZX«»C
-------
TABLE 16B. PER-FACILITY ANNUAL1ZED CONTROL COSTS AS A PERCENT OF REVENUE/BUDGET :
MWI OPERATORS OTHER THAN HOSPITALS
—NEW NUU--
Intermittent NW1
Industry
Nursing homes
100* Employees
Tax-paying
Tax-exempt
Veterinary facilities
10-19 Employees
20* Employees
Commercial research labs
Tax-paying
20-99 Employees
100* Employees
Tax-exempt
Commercial incineration fac.
C.0.2
0.28X
0.20X
1.02X
0.47X
0.33X
0.12X
0.13X
C.0.3
1.50X
1.07X
S.57X
2.57X
1.81X
0.48X
0.61X
C.0.4
3.52X
2.S3X
13.31X
6.15X
4.32X
0.81X
1.21X
•
Batch, continuous.
or pathological MUI
C.0.2 C.0.3 C.0.4
0.90X 5.14X 12. 7BX
0.42X 2.3n 5.91X
.
0.29X 1.67X 4.15X
0.10X 0.3BX 0.67X
4.74X 20.77X 31.87X
a
Table 15 indicates which type of MWI -- batch, continuous, or pathological •- is applicable.
-80-
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under Control Option 2 to 0.29 percent under Control Option
4 for urban hospitals, and from 0.08 percent to 1.23 percent
for rural hospitals. The impacts on rural hospitals are
higher because rural hospitals are smaller on average than
urban hospitals.
All facility price increases under Control Option 2 are
less than one percent. They are therefore considered to be
achievable. Institutional constraints may prevent the price
increases from being fully achieved in the short run.
Still, in the U.S. system of health care financing,
hospitals are reimbursed by third parties for the majority
of cost increases. In the long run, institutional
constraints on the ability of hospitals to fully pass along
control.costs should be less of a factor.
Under Control Options 3 and 4, hospitals with fewer
than 50 beds will need to increase prices by more than one
percent in order to recover control costs. The same applies
to hospitals with 50-99 beds under Control Option 4. The
average facility price increase is 1.17 percent under
Control Option 3 and 2.89 percent under Control Option 4 for
hospitals with fewer than 50 beds, and ranges up to 1.33
percent under Control Option 4 for hospitals with 50-99
beds. These facility price increases may not be achievable
against market price increases (see Table 10) of 0.128
percent under Control Option 3 and 0.256 percent under
Control Option 4 (maximum control costs for existing MWls),
or 0.020 percent under Control Option 3 and 0.040 percent
under Control Option 4 (minimum control costs for existing
MWIs).
There are also two subcategories in which the average
number of beds per facility is greater than 100 that have a
facility price increase exceeding 1 percent under Control
Option 4. They are t.b. hospitals (only 4 nationwide) and
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"other" hospitals not registered with the American Hospital
Association (only 12 nationwide).
Small hospitals (e.g., fewer than 100 beds) may not
only be prevented from achieving the facility price increase
by competition from other hospitals. They also face
particular institutional constraints in raising prices (or
achieving rate increases). Small hospitals are often
located in rural areas, where the population is
disproportionately aged and poor. This makes rural
hospitals relatively dependent on Medicare and Medicaid.
Rural hospitals also have high costs of charity care because
rural areas have high concentrations of uninsured people.
Moreover, a disproportionate number of small hospitals are
public. Many public hospitals rely on government subsidies,
which have been cut back in recent years.
3.5.2.2 Other MWI Operators. A number of the facility
price increases calculated in Table 16B may not be
achievable because they deviate significantly from the
market price increase. These include the impacts for both
subcategories of nursing homes with 100+ employees under
Control Options 3 and 4. For tax-exempt nursing homes with
100+ employees, even a facility price increase of 1.07
percent under Control Option 3 may not be sustainable
against a market price increase of only 0.008 percent
(minimum control costs for existing sources). Other cases
in Table 16B in which the facility price increase may not be
achievable include veterinary facilities with 20+ employees
under Control Options 3 and 4; veterinary facilities with
10-19 employees under Control Options 2, 3, and 4; and tax-
paying commercial research labs with 20-99 employees under
Control Options 3 and 4. The 1.21 percent facility price
increase for tax-exempt commercial research labs under
Control Option 4 is probably achievable if existing sources
are controlled as stringently as new sources (in this case
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of maximum control costs for existing sources, the market
price increase is 0.610%), but is probably not achievable if
existing sources are not controlled (in which case the
market price increase is 0.046%).
In all of these cases, few facilities are projected to
operate a new MWI in the next five years: 18 nursing homes,
6 veterinary facilities, and 36 research labs. For this
reason, the facility price increase is large in relation to
the market price increase based on no control costs for
existing sources. Facility price increases that are large
in relation to the market price increase based on maximum
control costs for existing sources are the consequence not
only of the low number of new MWIs projected over the next
five years, but also of the predominance of facilities that
presently do not operate an MWI: 97.1 percent of all
nursing homes, 97.4 percent of all veterinary facilities,
and, conservatively (because it is assumed that all research
labs are commercial facilities), 86.9 percent of all
research labs (compare Tables 3 and 5).
As discussed in Section 3.4.3, it is expected that due
to an increase in the demand for offsite incineration,
commercial incineration facilities will be able to fully
pass along control costs to their customers. This means
that the facility price increases in Table 16B — 4.74
percent under Control Option 2, 20.77 percent under Control
Option 3, and 31.87 percent under Control Option 4 — are
achievable. To be sure, the price increases under Control
Options 3 and 4 are high. However, as will be seen later in
Section 3.5.5, the per-ton cost of commercial incineration
does not increase as a result of the NSPS by as much, on
average, as the per-ton cost of onsite incineration.
Therefore, despite the price increases of 20.77 percent
under Control Option 3 and 31.87 percent under Control
Option 4, many MWI operators would be able to save costs by
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switching to commercial incineration (i.e., their costs of
onsite incineration increase by more than 20.77 percent and
31.87 percent, respectively).
3.5.3 Cost Absorption
In the previous section it was seen that it may not be
possible in all cases to implement the facility price
increase and fully recover control costs. Tables 17A and
17B calculate the impact on net income if control costs are
fully absorbed. This represents the extreme case of no
price increase. The impact is calculated as the ratio of
annualized control costs to before-tax net income. This
ratio indicates the percent reduction in earnings if there
is no price increase. Before-tax net income is the
appropriate measure of earnings because control costs are
before taxes and are tax-deductible. For some subcategories
of hospitals in Table 17A, after-tax net income is used as a
substitute because before-tax net income is not available.
This leads to a conservative estimate of impacts because
after-tax net income is less than or equal to before-tax net
income.
A cost increase is considered sustainable if it does
not lead to closure. For a newly built MWI resulting from
industry growth, closure is represented by a change in the
decision to open a new facility. For all other types of new
MWIs, closure is represented by the decision to shut down an
existing facility.
In the short run, the theoretical closure point is when
variable costs, including incremental annualized control
costs, exceed revenues. Since some costs are fixed, net
income must decline by more than 100 percent for the short-
run closure threshold to be surpassed. In the long run,
however, a firm is free to redeploy its capital to
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TABLE 17A. PEK-FACILITY ANNUALIZED CONTKOL COSTS AS A PERCENT OF MET INCOKE : HOSPITALS
• •NEW NUU"
Inter»ittent MW1
Industry category
AHA- registered
federal
Psychiatric
Other special I general
«50 Beds
$0-99 Beds
100-299 teds
300* Beds
Non-federal
Psychiatric
Not-for-profit
For-prof it
State govt.
Local govt.
T.B. ( other resp. diseases
Long-term other special t gen.
Not-for-profit
For-prof it
State govt.
Local govt.
Short-tern- other special t gen.
Not-for-profit
<50 Beds
50-99 Beds
100-299 Beds
300- Beds
For-prof it
<50 Beds
$0-99 Beds
100-299 Beds
300* Beds
State govt.
<50 Bess
50-99 Beds
100-299 Beds
300- Beds
local govt.
<50 Beds
50-99 Beds
100-299 6eC<
300- Beds
Kop-AMA-rejisteied
Non-Federal psychiatric
Short-term othe< special I gen.
Other
Total
<5C Beds
50-99 Beds
100-299 Beds
300- Beds
Subset :conrunity f»osp.
Urban
<50 Beds
50-99 Beds
100-299 Beds
300* leds
Rural
<50 Beds
50-99 Beds
100-299 Beds
300* leds
2.15k
2.12X
1.161
1.11X
2.42X
2.09*
3.58X
3.13X
5.26X
3. MX
1.86X
2.86X
3.62X
3. MX
I.SOX
0.73X
N.N.
1.32X
0.70X
4.26X
1.27X
0.60X
5.29X
1.785
0.75X
4.275
4.505
A. 301
1.60X
4.905
1.6*5
0.84X
0.945
2.6SX
6.63X
11.51X
5.30X
4.44X
13.18X
11.39X
U.35X
12.54X
24. WX
13.91X
10.12X
13.10X
14.48X
21.12X
6.B6X
2.91X
N.H.
6.03X
2.78X
25.15X
5.83X
2.4ix
28.77X
8.UX
3.00X
23.24X
24.48X
19.67X
7.33X
26.62X
7.665
3.36X
4. SOX
14.55X
14.56X
27. SOX
10.54X
7.50X
31.S1X
27.22X
24.21X
21.16X
47.821
27.68X
24.19X
26.06X
24.43X
50.46X
13.64X
4.91X
N.M.
12.00X
4.70X
55.32X
11.59X
4.07X
68.76X
16.181
5.07X
55.55X
58. SOX
39.12X
u. sex
63.63X
15.251
5.67X
8.SSX
S4.77X
latch, contlnu
or pathological
1.76X
4.70X
i.erx
0.91X
2.14X
1.85X
2.93X
2.56X
1.64X
2.96X
9.22X
3.42X
0.60X
N.M.
N.M.
0.57X
10.885
3.75X
0.47X
13.60X
4.665
0.61X
3.77X
3.97X
11.49X
4.32X
0.695
2.36X
0.74X
22.84X
10.62*
3.47X
12.16X
10.51X
11.21X
9. BOX
9.34X
11.315
U.80X
19.48X
2.2BX
N.M.
N.M.
2.17X
52. en
21.365
1.M5
6e.08X
26.SSX
2.3SX
21.455
22.59X
55.825
24.57X
2.63X
13.43X
out,
MWI
11.91X
S6.65X
26.42X
6.14X
30.27X
26.15X
19. SIX
17.31X
23.24X
19.99X
111. 11X
48.48X
4.02X
N.M.
N.M.
3.845
131. 11X
53.15X
3.33X
163.885
66.0SX
4.14X
53.37X
56.20X
138. 43X
61.135
4.64X
33.41X
Divisor is before-tax net incone except for T.B. hospitals, hospitals net
registered with the AM*, "Total" (and subeategories), and eemrumty hospitals,
for which only a'ter-tax ne; income is available.
b
Table 15 indicates which typ? ef MVI
applicable.
batch, continuous, or pathological -• it
N.M. Not neaningfgl.
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TABLE 17B. PER-FACILITY ANNUAL1ZED CONTROL COSTS AS A PERCENT OF BEFORE-TAX NET INCOME :
MW1 OPERATORS OTHER THAN HOSPITALS
—NEW HWU--
Intermittent NW1
•atch, continuous,
or pathological MWI
Industry
Nursing homes
100+ Employees
Tax-paying
Tax- exempt
Veterinary facilities
10-19 Employees
20+ Employees
Cofmercial research labs
Tax-paying
20-99 Employees
100+ Employees
Tax-exempt
Commercial incineration fac.
C.0.2
6.99X
7.17X
2.66X
1.23X
5.54X
2.01X
3.17X
C.0.3
37.39X
38.36X
H.46X
6.68X
30.10X
8. MX
U.51X
C.0.4
U.OSX
90.33X
34.56X
15.97X
71.95X
13.56X
28.66X
C.0.2 C.0.3 C.0.4
2.34X 13.3AX 33.20X
1.08X 6.16X 15.34X
*.88X 27.78X 69.12X
1.64X 6.28X 11.09X
N/A N/A N/A
Table 15 indicates which type of MWI -• batch, continuous, or pathological •- is applicable.
N/A Not available.
-86-
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investments that yield a higher rate of return. In the long
run, therefore, the closure point is when the rate of return
on capital falls below the opportunity cost of capital.
3.5.3.1 Hospitals. For all of the cases in which
hospitals may not be able to achieve the facility price
increase, Table 17A shows that the impact on net income
would be significant if control costs had to be fully
absorbed. Net income would decline at the average hospital
with fewer than 50 beds by 55.82 percent under Control
Option 3 and by 138.43 percent under Control Option 4. Net
income would decline at the average hospital with 50-99 beds
by from 61.13 to 63.63 percent under Control Option 4.
These impacts are possibly unsustainable ~ if not in the
short run, then in the long run. The impacts under Control
Option 4 for t.b. hospitals and "other" hospitals not
registered with the American Hospital Association are also
significant. (The impacts on short-term other special and
general for-profit hospitals with fewer than 50 beds and 50-
99 beds are "not meaningful" because net income in the
baseline is negative).
3.5.3.2 Other MWI Operators. Table 17B points to some
additional cases in which control costs may not be
sustainable if they cannot be recovered with a price
increase. These include nursing homes with 100+ employees
under Control Options 3 and 4, veterinary facilities with
10-19 employees under Control Options 3 and 4, veterinary
facilities with 20+ employees under Control Option 4, tax-
paying commercial research labs with 20-99 employees under
Control Options 3 and 4, and tax-exempt commercial research
labs under Control Option 4. In the two other cases in
which the facility price increase may not be achievable —
veterinary facilities with 10-19 employees under Control
Option 2 and veterinary facilities with 20+ employees under
Control Option 3 — control costs are probably sustainable.
-87-
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The decline in net income is only 2.34-2.66 percent under
Control Option 2 for veterinary facilities with 10-19
employees and 6.16-6.68 percent under Control Option 3 for
veterinary facilities with 20+ employees.
3.5.4 Capital Availability
Tables ISA, 18B, 19A, and 19B capture some of the
impacts of capital control costs on operators of new MWIs.
Tables ISA and 18B present the ratio of capital costs to
before-tax net income. Before-tax net income is used as a
proxy for cash flow before taxes, which can be used to
service debt. This assumes a constant asset base (i.e.,
capital expenditures are offset by depreciation). The ratio
in Tables ISA and 18B gives an indication of the extent to
which capital costs can be financed from one year's cash
flow. Of course, capital costs do not have to be paid from
cash flow, but the ability to do so in one year suggests
that either external financing is not needed, or it would
not be difficult to obtain. If the ratio exceeds 100
percent, it is possible that debt will have to be issued
(normally for an investment in pollution controls, it is
assumed that equity will not be issued because the
investment does not add to the firm's productive capacity).
In Tables 19A and 19B, the ratio of capital costs to
total (current and long-term) liabilities is calculated
(total liabilities are calculated from Tables 6A, 6B, and 6C
as the difference between assets and net worth). In the
event debt is issued, this gauges the impact on capital
structure. Creditors are reluctant to lend to firms with a
high degree of financial leverage (i.e., high ratio of debt
to net worth) because there is a high risk that debt cannot
be repaid. If total liabilities increase by, say, 20
percent, it may bo difficult to obtain financing. Take a
firm with assets of $100, current liabilities of $20,
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TAiLE 18A. PER-FAC1L1TY CAPITAL CONTBOL COSTS AS A PERCENT OF NET INCOME
••NEW MWIf
HOSPITALS
Intermit tent MUI
Industry category
AHA- registered
Federal
Psychiatric
Other special I general
, and eonrunity hospitals,
for which only after-tan net income is available.
Table 14 indicates whir* type of WUi
applicable.
N.M. Not neaningful.
batch, continuous, or pathological
-89-
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TABLE IBB. PER-FAC1LITY CAPITAL CONTROL COSTS AS A PERCENT OF BEFORE-TAX NET INCOME :
MUI OPERATORS OTHER THAN HOSPITALS
—NEW MUIc--
Intermittent MUI
latch, continuous,
or pathological NWI
Industry
Nursing homes
100+ Employees
Tax-paying
Tax-exempt
Veterinary facilities
10-19 Employees
20+ Employees
Commercial research labs
Tax-paying
20-99 Employees
100+ Employees
Tax-exempt
Commercial incineration fac.
C.O
18.
19.
7.
3.
15.
3.
6.
.2
75X
24X
29X
37X
17X
S4X
95X
C.I
126
129
49
22
103
19
40
3.3
.15X
.42X
.59X
.91X
.22X
.42X
.60X
C.O
348.
358.
138.
63.
287.
43.
102.
.4 C.0.2
97X
OOX
10X 7.59X
BOX 3.51X
46X 15.79X
48X 2.90X
59X
N/A
C.0.3 C.O. 4
50.81X 140. 22X
23.48X 64.78X
105. 77X 291 .89X
15.60X 36.93X
N/A N/A
Table U indicates which type of MUI •• batch, continuous, or pathological
applicable.
N/A Not available.
is
-90-
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TABLE 19A." PER-FACILITT CAPITAL'CONTROL COSTS AS A PERCENT OF TOTAL LIABILITIES :
HOSPITALS
-•HEW KWIs--
•ateh, continuous,
Intermittent MWI
Industry category
AHA- registered
Federal
Psychiatric
Other special i general
-------
TABLE 19B. PER-FAC1LITY CAPITAL CONTROL COSTS AS A PERCENT OF TOTAL LIABILITIES :
MUI OPERATORS OTHER THAN HOSPITALS
••NEW NVll--
BBBBBBCBEBBZBBBSBBBBBBBBEBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB
Industry
Intermittent NUI
C.0.2 C.0.3 C.0.4
latch, continuous,
or patholooical NUI
C.0.2
C.0.3
C.0.4
Nursing homes
100* Employees
Tax-paying
Tax-exempt
Veterinary facilities
10-19 Employees
20+ Employees
Commercial research labs
Tax-paying
20-99 Employees
100* Employees
Tax-exempt
Commercial incineration fac.
1.T8X
1.28X
11.97X
8.60X
S3.in
23.79X
17.97X 122.30X 340.59X
8.30X S6.50X 157.36X
3.94X 26.82X 74.70X
1.00X 5.05X 11.SOX
1.26X 7.39X 18.66X
18.71X 125.32X 345.83X
8.64X 57.90X 159.78X
4.10X
0.75X
N/A
27.49X
4.0SX
N/A
7S.85X
9.60X
N/A
XXBZXX
Table U indicates which type of MWI — batch, continuous, or pathological •• is applicable.
N/A Not available.
-92-
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long-term debt of $30, and net worth of $50. Total
liabilities (current liabilities plus debt) are $50. If an
increase in debt causes total liabilities to increase by 20
percent, the increase in debt will be from $30 to $40.
Meanwhile, assets increase from $100 to $110. Consequently,
the ratio of debt to assets (which is scrutinized by
lenders) increases from 30 percent to 36.4 percent.
However, as pollution-control equipment, the new assets are
not income-generating. In relation to productive assets,
debt has increased from 30 percent to 40 percent.
An increase in total liabilities of 20 percent is not,
to be sure, a definitive threshold beyond which no
facilities will be able to obtain external financing. There
will always be some facilities that are able to take on debt
and, as a result, expand total liabilities by 20 percent, or
even much more. Conversely, some facilities will be limited
to expanding total liabilities by far less than 20 percent.
However, an average increase in total liabilities of 20
percent is likely to make external capital difficult to
obtain for at least some facilities. Therefore, with but
one exception, a 20 percent increase in total liabilities is
used as a guideline for significant impacts. The exception
is made for cases in which the facility price increase is
achievable (see Section 3.5.2). The facility price increase
recovers all annual costs, including the annualized cost of
capital (interest and depreciation). Achieving the facility
price increase therefore implies that additional cash flow
will be generated to pay for the cost of debt (i.e.,
interest). In theory, the capital markets should recognize
this and make financing available, regardless of the impact
of additional debt on total liabilities.
The impacts in Tables ISA, 18B, 19A, and 19B are per-
facility. They therefore really only apply to stand-alone
facilities. For facilities that are affiliated with roulti-
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unit systems, the impacts in these tables are overstated.
This is because multi-unit systems have a greater capacity
to borrow than stand-alone facilities. Approximately 80
percent of all for-profit hospitals and 33 percent of all
not-for-profit hospitals, for example, are affiliated with
multi-hospital systems.50
3.5.4.1 Hospitals. Table ISA indicates that, on
average, hospitals with fewer than 50 beds under Control
Options 3 and 4, and hospitals with 50-99 beds under Control
Option 4, will require more than one year's cash flow to
finance capital costs (the impacts exceed 100%). The ratio
of capital costs to net income ranges from 254.23 to 258.15
percent under Control Option 4 for the average hospital with
50-99 beds, and is 198.88 percent under Control Option 3 and
563.74 percent under Control Option 4 for the average
hospital with fewer than 50 beds. Under Control Option 4,
the ratio exceeds 100 percent for rural hospitals (138.94-
141.08%), but not for urban hospitals (30.40%). The ratio
also exceeds 100 percent under Control Option 4 in a couple
of subcategories with more than 100 beds per facility: t.b.
hospitals and "other" hospitals not registered with the
American Hospital Association.
The ratio of capital costs to total liabilities in
Table 19A exceeds 20 percent only for hospitals with fewer
than 50 beds under Control Option 4. Therefore, only
hospitals with fewer than 50 beds may in general, under
Control Option 4, have difficulty obtaining financing. As
20 percent is not a definitive threshold, this does not
preclude other facilities from having difficulty. Rural
hospitals, which are predominantly small (Table 6A indicates
that 72 percent have fewer than 100 beds), are more likely
to have difficulty than urban hospitals. Under Control
Option 4, the ratio of capital costs to total liabilities
-94-
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ranges from 10.60 to 10.76 percent for rural hospitals,
compared to only 2.22 percent for urban hospitals.
3.5.4.2 Other MWI Operators. Table 18B reveals a
number of cases for other MWI operators in which the ratio
of capital costs to before-tax net income exceeds 100
percent and therefore external financing nay be required.
These include nursing homes with 100+ employees under
Control Options 3 and 4, veterinary facilities with 10-19
employees under Control Option 4, tax-paying commercial
research labs with 20-99 employees under Control Options 3
and 4, and tax-exempt commercial research labs under Control
Option 4. Table 19B shows, in turn, that nursing homes with
100+ employees under Control Option 4, veterinary facilities
with 10-19 employees under Control Option 4, and tax-paying
commercial research labs with 20-99 employees under Control
Options 3 and 4 may have difficulty obtaining external
financing because the ratio of capital costs to total
liabilities exceeds 20 percent.
Under Control Option 4, the ratio of capital costs to
total liabilities for tax-exempt commercial research labs is
close to 20 percent (18.66%). Regardless, financing should
generally be available because the facility price increase
is achievable (see Section 3.5.2.2).
3.5.5 Substitution
Over half of all hospitals and an even greater majority
of nursing homes, veterinary facilities, and commercial
research labs do not operate an MWI. This suggests that
facilities in these industries generally have viable
alternatives to onsite incineration for the treatment and
disposal of medical waste. The most common alternatives to
onsite incineration are onsite autoclaving and offsite
contract disposal (roost commonly commercial incineration).
The cost to operate an autoclave system including a
shredder can vary widely. For example, operated at
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capacity, a large (1,176 tons/yr) unit is estimated to cost
$134 per ton while a small (27 tons/yr) unit is estimated to
cost $2,080 per ton. Onsite autoclaving has some
limitations. For one, autoclaving is not "suitable" for
some components of the medical waste stream, particularly
pathological waste. Suitability is determined by both
technical and nontechnical factors.51 The U.S. Congress
Office of Technology Assessment (OTA) estimates that
approximately 90 percent of all medical waste can be
autoclaved." Another limitation is that some landfills (and
waste haulers) are not willing to accept autoclaved waste
because it cannot easily be identified as having been
treated and disinfected. This "recognizability" problem can
often be solved, however, by shredding or compacting the
waste (either before or after it is autoclaved). Still,
some landfills will not accept such waste. Nevertheless,
"informal discussions" with a number of hospital officials
across the country indicated to OTA that "few refusals (of
autoclaved medical waste) occur if a hospital works closely
with landfill operators to explain their waste procedures."53
To the extent that it has limitations, autoclaving is
perhaps better considered as a supplement to incineration
than as a substitute for it. Regardless, autoclaving can
still be used to treat the great majority of medical waste
that is currently incinerated onsite.
The other major alternative to onsite incineration for
treating medical waste is offsite contract disposal (most
commonly commercial incineration). The average cost of
offsite contract disposal is estimated to be $600 per ton.
This cost can vary substantially. It can depend, for
example, on the hauling distance from the generator to the
treatment facility. Also, volume discounts may result in
lower fees for large generators than for small generators.
-96-
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Offsite contract disposal depends highly on the
availability of commercial incineration capacity. In some
regions of the country (e.g., the Northeast, Illinois,
Texas) , commercial incineration capacity is tight.54 In
other regions, there may be excess capacity. Building new
commercial incineration capacity is persistently hampered by
the difficulty of finding a site and the lengthy process of
obtaining a permit (up to two years or more, according to
OTA) ,55 Nevertheless, some regional incinerators (either
generator/non-profit or commercial) are currently being
planned.56 OTA concludes that potential short-term
shortfalls in commercial incineration capacity can be
averted if the "adoption of new regulations is coordinated
with careful planning and expedient permitting."57 Even if
commercial incineration capacity in the short term is
inadequate (due to imperfect "coordination," for example),
the NSPS should encourage additional capacity to come on
stream in the longer term. This is because the regulation
will increase the demand for commercial incineration, which
will increase the returns that can be earned by commercial
MWI operators. The reason the demand for commercial
incineration will increase is that regional and dedicated-
commercial MWIs are larger and more efficient on average
than onsite MWIs. As a result, they will experience lower
per-ton impacts from the regulation. This will encourage a
shift from onsite MWIs to commercial/regional MWIs. The
model combustors reflect that commercial/regional MWIs tend
to achieve economies of scale. While the Continuous 36,000
representing commercial incineration facilities has a
capacity of 3,907 tons per year and a baseline operating
cost of $75 per ton, the other model combustors range in
baseline cost from $101 per ton (Intermittent 21,000,
capacity 1,176 tons/year) to $1,244 per ton (Batch 250,
capacity 27 tons/year).
-97-
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Another possibility for accommodating an increase in
the demand for offsite contract disposal is an increase in
commercial autoclaving capacity. Presently there are
believed to be fewer than 24 commercial autoclaving
facilities in the U.S." However, autoclaving can be less
expensive than incineration.39 For instance, one commercial
facility operating both an autoclave and an incinerator
charges less for autoclaving — $600/ton versus $720/ton for
incineration.40 Consequently, the importance of commercial
autoclaving may increase in the future. Already, one large
waste management company reports that it is currently siting
more autoclaves than incinerators.61
Tables 20A, 2OB, and 20C compare the estimated annual
costs — before and after the NSPS — of onsite
incineration, offsite contract disposal (represented by
commercial incineration), and onsite autoclaving. The
incremental costs of onsite incineration are derived from
the control costs in Table 4. The costs of onsite
incineration and onsite autoclaving assume full-capacity
utilization (per-ton costs can be much higher if full
capacity is not utilized). The cost of onsite autoclaving
does not change with the regulation (this disregards the
potential increase in cost that could come from an increase
in the demand for autoclave systems).
Note, however, that the cost of offsite contract
disposal increases under each control option: by $4-25/ton
under Control Option 2, $20-86/ton under Control Option 3,
and $32-149/ton under Control Option 4. This is because the
cost of offsite incineration will increase as a result of
the NSPS (and the Emission Guidelines). The incremental
cost of offsite incineration is estimated by positing — as
for the calculation of the commercial incineration cost pool
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I
10
TABLE 20A. COMPARATIVE ANNUAL PER-TON COSTS
OF ONSITE MEDICAL WASTE INCINERATION
AND ALTERNATIVE TREATMENT METHODS: BASELINE AND
CONTROL OPTION 2
—NEW MWIs—
Model
Inter.
Cont.
Inter.
Path.
Inter.
Batch
MWI
21,000
24,000
8,400
2,000
2,000
250
Capacity
(tons/yr)
1,176
977
470
172
115
27
Onsite
incin-
eration
$ 101
173
177
333
457
1,244
Baseline
Offsite
contract
disposal
$600
600
600
600
600
600
Control Ootion
Onsite
auto-
claving
$ 134
160
228
N.A.
570
2,080
Onsite
incin-
eration
$ 132
204
215
381
538
1,600
Offsite
contract
disposal*
$604-625
604-625
604-625
604-625
604-625
604-625
2
Onsite
auto-
claving
$ 134
160
228
N.A.
570
2,080
The low end of the range is based on no control costs for existing MWIs, while the
high end is based on the sane control stringency for existing MWIs under the
Emission Guidelines as for new MWIs under the NSPS. The methodology recognizes
that the cost of offsite incineration will be influenced by both the NSPS and the
Emission Guidelines.
N.A. Not applicable.
Abbreviations: Cont. = Continuous, Inter.
Intermittent, Path. = Pathological.
-------
TABLE 2OB. COMPARATIVE ANNUAL PER-TON COSTS
OF ONSITE MEDICAL WASTE INCINERATION
AND ALTERNATIVE TREATMENT METHODS: BASELINE AND
CONTROL OPTION 3
—NEW MWIS—
o
o
Model
Inter.
Cont.
Inter.
Path.
Inter.
Batch
MWI
21,000
24,000
8,400
2,000
2,000
250
^
Capacity
(tons/yr)
1,176
977
470
172
115
27
Onsite
incin-
eration
$ 101
173
177
333
457
1,244
Offsite
contract
disposal
$600
600
600
600
600
600
Onsite
auto-
claving
$ 134
160
228
N.A.
570
2,080
Onsite
incin-
eration
$ 226
291
351
605
897
2,966
Offsite
contract
disposal"
$620-686
620-686
620-686
620-686
620-686
620-686
Onsite
auto-
claving
$ 134
160
228
N.A.
570
2,080
The low end of the range is based on no control costs for existing MWIs, while the
hiah end is based on the same control stringency for existing MWIs under the
Emission Guidelines as for new MWIs under the NSPS. The methodology recognizes
that the cost of offsite incineration will be influenced by both the NSPS and the
Emission Guidelines.
N.A. Not applicable.
Abbreviations: Cont. = Continuous, Inter. = Intermittent, Path. = Pathological.
-------
I
*-•
o
TABLE 20C. COMPARATIVE ANNUAL PER-TON COSTS
OF ONSITE MEDICAL WASTE INCINERATION
AND ALTERNATIVE TREATMENT METHODS: BASELINE AND
CONTROL OPTION 4
—NEW MWIs—
Model
Intci .
Cont.
Inter.
Path.
Inter.
Batch
MWI
21,000
24,000
8,400
2,000
2,000
250
Capacity
(tons/yr)
i,176
977
470
172
115
27
Onsite
incin-
eration
$ 101
173
177
333
457
1,244
Baseline
Offsite
contract
disposal
$600
600
600
600
600
600
Control Ont-inn A
Onsite
auto-
claving
$ 134
160
228
N.A.
570
2,080
Onsite
incin-
eration
$ 312
381
525
1,007
1,510
5,504
Offsite
contract
disposal*
$632-749
632-749
632-749
632-749
632-749
632-749
Onsite
auto-
claving
$ 134
160
228
N.A.
570
2,080
•The low end of the range is based on no control costs for existing MWIs, while the
high end is based on the same control stringency for existing MWIs under the
Emission Guidelines as for new MWIs under the NSPS. The methodology recognizes
that the cost of offsite incineration will be influenced by both the NSPS and the
Emission Guidelines.
N.A. Not applicable.
Abbreviations: Cont. - Continuous, Inter. = Intermittent, Path. = Pathological.
-------
in Section 3.4.1 ~ that 100 percent of capacity at
commercial incineration facilities (by definition) and 10
percent of capacity at hospitals, veterinary facilities, and
commercial research labs is used for commercial
incineration. As a result, it is estimated that 317,270
tons per year of new capacity over the next five years will
be used for commercial incineration. It is also recognized
that in addition to the impact of the NSPS on new sources,
commercial incineration capacity at existing sources will be
impacted by the Emission Guidelines. It is estimated that
existing sources account for 702,865 tons per year of
commercial incineration capacity. The average incremental
cost impact of the NSPS on the commercial incineration
capacity of new sources is calculated to be $14/ton under
Control Option 2, $63/ton under Control Option 3, and
$104/ton under Control Option 4. For the commercial
incineration capacity of existing sources, the average cost
impact of the Emission Guidelines is $13/ton under Control
Option 1, $30/ton under Control Option 2, $96/ton under
Control Option 3, and $l69/ton under Control Option 4. Two
scenarios are considered: 1) the baseline (i.e., no
additional controls) for existing sources, and 2) the same
control stringency for existing sources under the Emission
Guidelines as for new sources under the NSPS. The
incremental cost of offsite incineration ~ $4-25/ton under
Control Option 2, $20-86/ton under Control Option 3, and
$32-149/ton under Control Option 4 — is then calculated as
a weighted average, by capacity, of existing and new
sources. The low end of each range follows from the first
scenario, while the high end follows from the second
scenario. It is assumed that the incremental cost of
offsite incineration will be fully passed along to offsite
generators.
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Tables 20A, 2 OB, and 20C show that the average cost of
onsite incineration in the baseline is generally lower than
the average cost of onsite autoclaving (autoclaving is not
an "applicable" substitute for the Pathological 2,000
because it cannot be used to treat pathological waste). The
exception is the Continuous 24,000, which costs more than an
autoclave system of the sane capacity.
Offsite contract disposal, in the baseline, is more
expensive on average than the Intermittent 2,000 and all
larger model combustors, but less expensive on average than
the smaller Batch 250. Offsite contract disposal is also
less expensive on average than an autoclave system of the
same capacity as the Batch 250.
With controls, the cost of onsite incineration relative
to onsite autoclaving becomes less favorable. Under Control
Option 2, the Continuous 24,000 continues to be the only
model MWI that is more expensive than onsite autoclaving.
Under Control Options 3 and 4, all model MWIs are more
expensive than onsite autoclaving (again, excluding the
Pathological 2,000, for which autoclaving is not a suitable
substitute). The relative cost of onsite incineration
increases as the control options become more stringent. For
example, the cost advantage of onsite autoclaving over
onsite incineration increases from Control Option 3 to
Control Option 4. The cost advantage of onsite autoclaving
under Control Options 3 and 4 is particularly high in
comparison to the smaller model combustors.
The tables also indicate that offsite contract disposal
is a cost-saving alternative to the Batch 250 under Control
Options 2, 3 and 4; to the Intermittent 2,000 under Control
Options 3 and 4; and to the Pathological 2,000 under Control
Option 4. The larger model combustors — the Intermittent
21,000, Continuous 24,000, and Intermittent 8,400 — remain
less expensive than offsite contract disposal under all
-103-
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three control options. Offsite contract disposal continues
to be less expensive on average than an autoclave system of
the same capacity as the Batch 250. In all other cases,
autoclaving is less expensive. Like onsite autoclaving, the
cost of offsite contract disposal relative to onsite
incineration becomes more favorable as the control options
become more stringent.
Estimated capital costs of a newly built MWI and a new
autoclave system are compared in Table 21. Offsite contract
disposal is not included because it has the advantage of
requiring no capital investment. As stated, autoclaving is
not a suitable alternative to the Pathological 2,000.
Otherwise, the table shows that the capital cost of a new
autoclave system is less than the capital cost of a newly
built MWI of the same capacity, even in the baseline. Since
it is implicit in the projection of new MWI sales that
capital costs can be financed, it follows that the capital
cost of an autoclave system that is substituted for a newly
built MWI can also be financed. This does not necessarily
hold for an autoclave system that is substituted for a
modified MWI. This is because the capital cost of an
autoclave system can exceed the capital cost of modifying an
MWI.
Because the relative cost of onsite incineration
increases as a result of the NSPS, and because capital to
invest in an alternative medical waste treatment system
should generally be available, it can be expected that a
major impact of the NSPS will be to trigger substitution.
This means that potential investments in new MWIs will be
foregone in favor of other medical waste treatment and
disposal options.
-104-
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in
i
TABLE 21. COMPARATIVE CAPITAL COSTS
OF A NEW MWI AND A NEW AUTOCLAVE SYSTEM
Model
Inter.
Cont.
Inter.
Path.
Inter.
Batch
MWI
21,000
24,000
8,400
2,000
2,000
250
Capacity
(tons/yr)
1,176
977
470
172
115
27
Baseline
$217,659
520,871
156,822
96,34E
95,266
71,669
C.0.2
$307,866
573,879
196,066
122,879
120,746
95,213
MWI
C.0.3
$592,812
806,145
386,174
274,059
268,696
237,236
C.0.4
$1,032,927
1,196,446
736,365
586,773
578,258
540,981
Autoclave
system1
$173,376
136,509
107,015
N.A.
77,521
66,406
'Includes the cost of a shredder.
N.A. Not applicable.
Abbreviations: Cont. = Continuous, Inter. = Intermittent, Path. = Pathological.
-------
The extent of substitution could be expected to vary
with the stringency of the control options because relative
to the costs of alternative medical waste treatment methods
such as onsite autoclaving and offsite contract disposal,
the cost of onsite incineration increases. As the control
options increase in stringency, more and more MWI operators
(or potential MWI operators) would be able to save costs by
substituting. Substitution would probably escalate under
Control Options 3 and 4. While there is a cost-saving
alternative to two model combustors in the baseline and
under Control Option 2, there is a cost-saving alternative
to five model combustors under Control Option 3 and six
model combustors under Control Option 4. A cost-saving
alternative is available for the Continuous 24,000 and Batch
250 in the baseline and under Control Options 2, 3, and 4;
for the Intermittent 21,000, Intermittent 8,400, and
Intermittent 2,000 under Control Options 3 and 4; and for
the Pathological 2,000 under Control Option 4.
Moreover, under Control Options 3 and 4, it can be
expected that there would be more substitution for small
MWIs than for larger MWIs (this is not a consideration under
Control Option 2 because only two model combustors have a
lower-cost alternative). This is because small MWIs have
comparatively high per-ton cost impacts from the NSPS. As a
result, cost savings from substituting for small MWIs are
greater.
While onsite autoclaving is the lower-cost alternative
in most cases, offsite contract disposal is the lower-cost
alternative to the smallest model combustor, the Batch 250
(capacity 27 tons/year). This suggests that offsite
contract disposal would be more cost-effective for small
facilities that generate insufficient medical waste to
achieve low per-ton costs operating an autoclave system.
Offsite contract disposal, which requires no capital
-106-
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investment, may also be more suitable for facilities with
limited capital (e.g., small facilities). Further, offsite
contract disposal may be necessary if landfills or waste
haulers are unwilling to accept autoclaved waste. Finally,
offsite contract disposal may be needed as a complement if
autoclaving cannot treat the entire medical waste stream.
Assuming profit-maximizing behavior, the opportunity to
reduce costs is sufficient for an MWI operator to consider
switching to an alternative medical waste treatment method •
(though, of course, other factors such as reliability,
safety, regulatory requirements, and liability exposure must
also be considered). However, in addition to being cost-
saving in some cases, substitution will also be necessary in
order to stay in business (or continue with plans to go into
business) if control costs are prohibitive. The operations
that would be in jeopardy would be those that result in, or
are dependent on, the generation of medical waste. In
Sections 3.5.2 and 3.5.3, a number of cases in which
annualized control costs may not be fully recoverable with a
price increase and the resulting impact on earnings may not
be sustainable were identified. In Section 3.5.4, it was
seen that capital to finance the investment in pollution
controls may not be readily available in some cases.
The impacts of control costs can be avoided by
substituting. However, there are also incremental costs
associated with substituting. This is because, with two
exceptions, the costs of onsite autoclaving and offsite
contract disposal are greater on average than the cost of
onsite incineration in the baseline. This was seen in
Tables 20A, 2OB, and 20C. The two exceptions are the
Continuous 24,000, which is more expensive on average in the
baseline than onsite autoclaving; and the Batch 250, which
is more expensive on average in the baseline than offsite
contract disposal.
-107-
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Table 22 presents incremental annual costs of onsite
autoclaving and offsite contract disposal over operating a
new MWI in the baseline. The table includes all industry
categories and subcategories in which, under at least one
control option, annualized and/or capital control costs may
be prohibitive (and therefore substitution may be
necessary). These categories and subcategories were
identified in Sections 3.5.2 through 3.5.4. The incremental
annual costs — which are derived from Tables 20A, 20B, and
20C — are equal to the per-ton cost differential between
the medical waste treatment alternative and onsite
incineration in the baseline, multiplied by the number of
tons treated per year. The number of tons treated per year
is based on full-capacity utilization of the model
combustors. The cost of onsite incineration therefore
assumes full-capacity utilization. The cost of onsite
autoclaving also assumes full-capacity utilization. As a
result of these assumptions, the incremental annual costs of
both onsite autoclaving and offsite contract disposal in
Table 22 are conservative, i.e., may be overstated. The
incremental annual cost of onsite autoclaving is
conservative because the number of tons treated per year may
be overstated (no doubt, many MWIs and autoclave systems are
not operated at full capacity). The incremental annual cost
of offsite contract disposal is conservative not only
because the number of tons treated per year may be
overstated, but also because the per-ton cost of onsite
incineration in the baseline would be understated if full
capacity is not utilized. This would lead to an
overstatement of the per-ton cost differential between
offsite contract disposal and onsite incineration in the
baseline.
-108-
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TABLE 22. INPUTS FOR PER-FACILITY SUBSTITUTION ANALYSIS
••NEW MWU--
Industry/Model MUI
Net Onsite
Revenue a auto- •—••-•-
($ nil.) income claving Baseline
Incremental annual cost of switching to:
Offsite contract disposal
C.0.2 C.0.3 C.0.4
Hospitals
<50 Beds
Batch 250
50-99 Beds
Inter. 2,000
Path. 2,000
100-299 Beds
T.B. I other resp. diseases
Inter 8,400
Non-AHA-registered, other
Inter 6,400
Nursing homes
100* Employees
Tax-paying
Inter 6,400
Inter. 2,000
Tax-exempt
Inter 8,400
Inter. 2,000
Veterinary facilities
10-19 Employees
Inter. 2,000
Path. 2,000
20* Employees
Inter. 2,000
Path. 2,000
Commercial research labs
Tax-paying
20-99 Employees
Inter. 2,000
Path. 2,000
Tax-exempt
Inter. 8.400
4.0 $83,250
9.1 S189.981
9.7 $340,933
12.1 $416,819
22,572
(17.388) (16,713) (15,066) (13,365)
12,995 16,445 19,320 26,335 33,560
N.A. 45,924 50,224 60,716 71,552
23,970 198,810 210,560 239,230 268,840
23,970 198,810 210,560 239,230 268,840
3.5 $139,944
4.9 $136,410
0.9 $349,750
2.0 $757,011
23,970
12,995
23,970
12,995
12,995
N.A.
12,995
N.A.
198,810
16,445
196,810
16,445
16,445
45,924
16,445
45,924
210,560
19,320
210,560
19,320
19,320
50,224
19,320
50,224
239,230
26,335
.239,230
26,335
26,335
60,716
26,335
60,716
268,840
33.580
268,840
33,580
33,580
71.552
33,580
71,552
2.8 $168,018
13.5 $564,900
12,995 16,445 19.320 26.335 33,580
N.A. 45,924 50,224 60,716 71,552
23,970
198.810 210.560 239,230 268,840
After-tax net income for hospit«U(because bcfore-tax net
before-tax net income for all else.
N.A. Not applicable.
Abbreviations: Inter."Intermittent, Path."Pathological.
income is not available in alt cases),
-109-
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The table shows that the incremental annual cost of
offsite contract disposal increases as the control options
become more stringent. This is because the NSPS (and the
Emission Guidelines) will cause the cost of offsite
incineration to increase. The incremental annual cost of
onsite autoclaving, on the other hand, is independent of the
control level. The negative incremental annual costs of
offsite contract disposal over the Batch 250, which is
assigned to hospitals with fewer than 50 beds, indicate that
compared to a Batch 250 in the baseline, offsite contract
disposal is less expensive in the baseline and under Control
Options 2, 3, and 4. Estimates of revenue and net income
introduced in Tables 6A and 6B are also included in Table
22,
Based on the inputs in Table 22, the price increase
necessary to fully recover incremental substitution costs is
calculated in Table 23, and the impact on net income if no
price increase is achieved (i.e., incremental substitution
costs are fully absorbed) is calculated in Table 24. Only
the cases in which control costs may be prohibitive (and
therefore substitution may be necessary) are examined. As
mentioned, these cases were identified in Sections 3.5.2
through 3.5.4. No cases in which control costs may be
prohibitive were identified under Control Option 2.
Therefore, only Control Options 3 and 4 are addressed in
Tables 23 and 24. In some cases in Tables 23 and 24, only
the impact of incremental substitution costs under Control
Option 4 is calculated because control costs under Control
Option 3 are not prohibitive.
For all subcategories of hospitals in Table 23, there
is at least one medical waste treatment alternative with
incremental costs that could be recovered with a price
increase of less than one percent. Such a price increase is
-110-
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TABLE 23. PER-FAC1L1TY ANNUAL I ZED SUBSTITUTION COSTS AS A PERCENT OF REVENUE
(ONLY FOR CASES IN WHICH SUBSTITUTION IS NECESSARY)
••NEW MUIs--
EBBBBBBB
Control Option 3
Control Option ^
Industry/Model MU!
Onsite Offsite
•uto- contract
diving disposal
Onsite Offsite
auto- contract
claving disposal
Hospitals
<50 Beds
Batch 250
50-99 Beds
Inter. 2,000
Path. 2,000
100-299 Beds
T.B. I other resp. diseases
Inter 8,400
Non-ANA-registered, other
Inter 8,400
Nursing homes
100* Employees
Tax-paying
Inter 6,400
Inter. 2,000
Tax-exempt
Inter 8,400
Inter. 2,000
Veterinary facilities
10-19 Employees
Inter. 2,000
Path. 2,000
20* Employees
Inter. 2,000
Path, 2,000
CoiTr*rcial research labs
Tax-paying
20-99 Employees
Inter. 2,000
Path. 2,000
Tax-exempt
Inter. 8,400
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0.56X
0.68X
0.37X
0.49*
0.27X
1.44X
N.A.
0.46X
N.A.
-0.38X
6.84X
0.75X
4.MX
0.54X
2.93X
6.75X
0.94X
2.17X
O.S6X
0.14X
N.A.
0.68X
0.37X
0.49X
0.27X
1.44X
N.A.
0.65X
N.A.
0.46X
N.A.
N.A. Not applicable.
Abbreviations: Inter.•Intermittent, Path.•Pathological.
0.18X
EBBBBBBBBBBBBBBBBBI
-0.33X
0.37X
O.T9X
0.25X 2.77X
0.20X 2.22X
7.68X
0.96X
5.49X
0.69X
3.73X
7.95X
1.68X
3.58X
1.20X
2.56X
1.99X
-111-
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TABLE 24. PER-FACILITY ANNUAL1ZED SUBSTITUTION COSTS AS A PERCENT OF NET INCOME
(ONLY FOR CASES IN WHICH SUBSTITUTION IS NECESSARY)
-•NEW NWls--
Industry/Model MUI
Control Option 3
Control Option 4
Onsite Offcite
•uto- contract
clavfng disposal
Onsite Offsite
auto- contract
claving disposal
Hospitals
<50 Beds
Batch 250
50-99 Beds
Inter. 2,000
Path. 2,000
100-299 Beds
T.B. I other resp. diseases
Inter 8,400
Non-AHA-registered, other
Inter 8,400
Nursing homes
100* Employees
Tax-paying
Inter 8,400
Inter. 2,000
Tax-exempt
Inter 8,400
Inter. 2,000
Veterinary facilities
10-19 Employees
Inter. 2,000
Path. 2,000
20* Employees
Inter. 2,000
Path. 2,000
Commercial research labs
Tax-paying
20-99 Employee:)
Inter. 2,000
Path. 2,000
Tax-exempt
Inter. 8,400
27.11X -18.10X
17.13X
9.295
17. 5n
9.53X
3.72X
N.A.
170. 95X
18.82X
175.38X
19.31X
7.53X
17.36X
7.73X
N.A.
15.67X
36. UX
27.11X -16.05X
6.84X 17.68X
N.A. 37.66X
7.03X 78.85X
5.75X 64.50X
17.13X 192.11X
9.29X 24.00X
17.57X 197.08X
9.53X 24.62X
3.72X 9.60X
N.A. 20.46X
1.72X
N.A.
4.44X
9.45X
7.73X 19.99X
N.A. 42.59X
4.24X 47.S9X
After-tax net income for hospitals(because before-tax net income is
in all cases), before-tax net income for all else.
N.A. Not applicabls.
Abbreviations: Inter. "Intermittent, Path.«Pathological.
not available
-112-
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considered achievable. It is therefore concluded that, in
general, hospitals can substitute. For the two
subcategories of hospitals with 100-299 beds included in the
table, the price increase necessary to recover incremental
offsite contract disposal costs exceeds one percent.
However, it is possible to switch instead to onsite
autoclaving, which would require at the most a price
increase of only 0.25 percent (t.b. hospitals). The
negative values associated with switching from the Batch 250
to offsite contract disposal reflect that the cost of
offsite contract disposal is lower.
Similarly, all subcategories of nursing homes can
recover the incremental cost of switching to offsite
contract disposal with a price increase under one percent.
Therefore, in general, nursing homes can also substitute.
In contrast to hospitals and nursing homes, some cases
in which the price increase necessary to recover incremental
substitution costs may not be achievable can be identified
in Table 23 for veterinary facilities and commercial
research labs. Considering, again, only the low-cost (and
low-impact) alternative, these cases include:
Veterinary facilities with 10-19 employees that
switch from the Intermittent 2,000 to onsite
autoclaving under Control Options 3 and 4
Veterinary facilities with 10-19 employees that
switch from the Pathological 2,000 to offsite
contract disposal under Control Options 3 and 4
Veterinary facilities with 20+ employees that
switch from the Pathological 2,000 to offsite
contract disposal under Control Option 4
Tax-paying commercial research labs with 20-99
employees that switch from the Pathological 2,000
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to offsite contract disposal under Control Options
3 and 4
Table 24, in turn, shows that there could be some
significant impacts on net income if prices cannot be
increased to recover incremental substitution costs. Using
a 10 percent decline in net income (in the extreme event of
no price increase) as the criterion for a significant
impact, the following two cases are identified:
Veterinary facilities with 10-19 employees that
switch from the Pathological 2,000 to offsite
contract disposal under Control Options 3 and 4
Tax-paying commercial research labs with 20-99
employees that switch from the Pathological 2,000
to offsite contract disposal under Control Options
3 and 4
Both cases involve switching from the Pathological
2,000 to offsite contract disposal under Control Option 3
and Control Option 4. Referring back to Table 2, it is seen
that veterinary facilities and research labs are both
projected to invest in only one Pathological 2,000 in the
next five years. However, this does not necessarily mean
that only two facilities will experience the significant
impacts in Table 24. As a model combustor, the Pathological
2,000 represents MWI operators that generate a substantial
proportion and/or quantity of pathological waste
("pathological waste generators"). This does not preclude
other MWI operators from also being pathological waste
generators, however. Pathological waste does not have to be
burned in a pathological incinerator. An intermittent MWI
is capable of burning pathological waste, for example. Some
pathological waste generators are probably represented in
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Table 2 by MWIs other than the Pathological 2,000. These
facilities, too, would be unable to use onsite autoclaving
for a substantial proportion and/or quantity of their
medical waste (i.e., for their pathological waste).
Therefore, the significant impacts in Table 24 should be
construed to apply to all pathological waste generators, not
just to operators of the Pathological 2,000. The question
is, do these significant impacts imply closure, or at least
the termination of operations that result in, or are
dependent on, the generation of medical waste?
The answer in most cases is probably, no. This is
based on the realization that 97.4 percent of all veterinary
facilities and, at a minimum, 86.9 percent of all commercial
research labs currently survive without operating an MWI
onsite. Pathological waste generators that are forced to
switch from onsite incineration to offsite contract disposal
will simply be joining the majority of facilities in these
industries that already utilize this method of medical waste
treatment and disposal. It seems paradoxical, then, that
net income could decline by as much as the amounts
calculated in Table 24, How could a facility that is forced
to substitute experience a decline in net income of up to 43
percent (tax-paying commercial research labs with 20-99
employees switching from the Pathological 2,000 to offsite
contract disposal under Control Option 4) and still be
competitive with facilities that do not operate an MWI and
do not experience similar impacts? The answer is that, on
average, facilities that operate an MWI have a per-ton cost
advantage over facilities that do not operate an MWI. This
cost advantage, which was evident in the baseline figures in
Tables 20A, 20B, and 20C, reflects economies of scale that
facilities generating a sufficient amount of medical waste
are able to achieve by operating an MWI. Substituting for
onsite incineration simply means that the cost advantage
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will be lost. Substitution may cause net income to decline
significantly, but the decline will be from a level that, in
the baseline, is above the industry norm. (The estimates of
net income in Tables 6A, 6B, and 6C are only averages.
There is, of course, variation around these estimates.)
After substitution to offsite contract disposal,
profitability will be more in line with the profitabilities
of facilities that already utilize offsite contract
disposal.
It must also be considered that, as discussed, the
incremental costs of offsite contract disposal in Table 22
presume full-capacity utilization of a new MWI in the
baseline. Many MWIs are not operated at full capacity. The
impacts in Tables 23 and 24 are overstated for facilities
switching to offsite contract disposal that will not operate
a new MWI at full capacity in the baseline. Recall in
Sections 2.4.7 and 2.4.8 that classifying veterinary
facilities with 10-19 employees and tax-paying commercial
research labs with 20-99 employees as MWI operators were
said to be conservative measures. It is possible that
relatively few facilities in these subcategories will
operate a new MWI. And those that will are likely to be
larger than the average facility represented by the model
parameters in Table 6B. Based on the model parameters, the
average veterinary facility with 10-19 employees was
estimated to generate only 3.8 tons per year of medical
waste, and the average tax-paying commercial research lab
with 20-99 employees only 13.7 tons per year. These rates
fall far short of full utilization of a Pathological 2,000
with a capacity of 172 tons per year, suggesting that the
impacts in Tables 23 and 24 on veterinary facilities with
10-19 employees and tax-paying commercial research labs with
20-99 employees are overstated.
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There may, under Control Options 3 and 4, be a few
exceptions in which a veterinary facility with 10-19
employees or a tax-paying commercial research lab with 20-99
employees that is a pathological waste generator would have
to shut down, however. This will depend on market
segmentation, or, specifically, the number and types of
medical waste generators found in individual market
segments. Recall that most, if not all, of the regulated
industries are highly segmented, consisting of regional and
local markets (commercial research labs may be an
exception). There is no reason to believe that an MWI
operator, if forced to switch to offsite contract disposal,
would have to shut down if most of its competitors already
utilize this method of medical waste treatment and disposal.
After substitution, the MWI operator would be on a par with
its competitors. Consider, on the other hand, an MWI
operator that competes substantially with other MWI
operators that are not forced to substitute (because, for
example, they are larger and therefore able to operate a
larger and more cost-efficient MWI than the Pathological
2,000). The competitive position of this MWI operator, if
forced to substitute, could be compromised. Instead of
losing a cost advantage, the MWI operator would be losing
the means necessary to stay competitive with the other, most
likely larger, facilities in its market segment. This
situation could exist in some market segments, though it
should not be common given the predominance of facilities
that do not operate an MWI onsite.
In addition, under Control Options 3 and 4, some MWI
operators generating a substantial proportion and/or
quantity of pathological waste might have to shut down if
they are located in a market segment in which the cost of
offsite contract disposal is significantly above average
($600/ton in the baseline) . To the extent, that the cost of
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offsite contract disposal is above average, the impacts of
switching to offsite contract disposal in Tables 23 and 24
are understated (though not necessarily pet of the
overstatement that results if the MWI is utilized at less
than full capacity in the baseline). This applies to
pathological waste generators in all industry categories and
subcategories in which control costs are potentially
prohibitive, identified in Table 22, not just veterinary
facilities with 10-19 employees and tax-paying commercial
research labs with 20-99 employees. This nay even apply to
some facilities that are not pathological waste generators
— i.e., to which the Pathological 2,000 has not been
assigned. Such facilities are said to be able to switch to
onsite autoclaving, for which none of the impacts in Tables
23 and 24 are significant. However, it must be recalled
that, on average, 10 percent of the medical waste stream
cannot be autoclaved. Therefore, even MWI operators that
switch to onsite autoclaving nay have to utilize offsite
contract disposal for a small portion of their medical waste
stream.
Medical waste generators that are remote from a
treatment facility are likeliest to pay more than average
for offsite contract disposal. Often such nedical waste
generators are located in sparsely populated areas. A
mitigating factor is that medical waste generators located
in sparsely populated areas are likely to face little
competition. Such facilities probably have above-average
pricing power and may be able to exceed the market price
increase. This would reduce the portion of incremental
substitution costs that could not be recovered with a price
increase and therefore would have to be absorbed.
Medical waste generators in populous areas nay be
remote from a treatment facility with available capacity if
local or regional offsite treatment capacity is tight. A
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mitigating factor in this case is that a shortage of medical
waste treatment capacity is probably more likely to elicit
the construction of new capacity for a populous area than
for a relatively unpopulated area because the market in the
populous area is larger.
3.6 PER-FACILITY IMPACTS FOR OFFSITE GENERATORS
The NSPS will not only impact facilities that operate a
new MWI, but also facilities that generate medical waste and
send it offsite to be incinerated. Such facilities are
likely to pay higher fees for commercial incineration as a
result of the NSPS (and the Emission Guidelines).
In Section 3.5, per-facility impacts were calculated
for operators of a new MWI. In all of the industries in
which MWIs are operated, with the exception of commercial
incineration facilities, MWI operators and offsite
generators coexist. In fact, offsite generators comprise
the majority of facilities in all of these industries.
Average impacts on offsite generators in industry categories
and subcategories defined to consist of both MWI operators
and offsite generators (specified in Tables 6A and 6B)
cannot be measured because comparative scale parameters
(e.g., medical waste generated) for MWI operators and
offsite generators are not known. For example, it is likely
that the average hospital that is an offsite generator is
smaller than the average hospital that operates an MWI. How
much smaller is not known.
However, some conclusions can be made about the impacts
of the NSPS on this type of offsite generator — that is,
offsite generators that coexist in industry categories or
subcategories with MWI operators: (1) There will be no
direct impact on offsite generators with no dependence on
offsite incineration (though there may be indirect impacts
if the demand for, and therefore the price of, alternative
waste treatment methods increases). (2) The cost impact
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will vary with the degree of dependence on offsite
incineration. (3) On average, offsite generators with 100
percent dependence on offsite incineration will be impacted
less by the NSPS than operators of a new MWI in the same
industry. This is because MWIs used for commercial
incineration are larger than average and therefore have
comparatively low control costs per ton. In Section 3.5.5
it was revealed that the average joint impact of the NSPS
and Emission Guidelines on the cost of commercial
incineration is $4-25/ton under Control Option 2, $20-86/ton
under Control Option 3, and $32-149/ton under Control Option
4. Of all the model combustors, only the Continuous 36,000,
which is attributed exclusively to commercial incineration
facilities, is impacted less by the NSPS: $12/ton under
Control Option 2, $53/ton under Control Option 3, and
$82/ton under Control Option 4. (4) In some situations, an
offsite generator could experience cost impacts similar to
an MWI operator of the same size (e.g., generating the same
amount of medical waste) in the same industry. The offsite
generator would have to be as dependent on offsite
incineration as the MWI operator is dependent on onsite
incineration (normally 100%), and would have to rely on
incineration by a commercial MWI that is comparable in size
and efficiency to the MWI used by the onsite operator. That
the impacts would be comparable follows from the premise
that commercial incineration costs are fully passed along to
customers. In Section 3.5.5, it was seen that under Control
Options 3 and 4, some veterinary facilities with 10-19
employees and tax-paying commercial research labs with 20-99
employees that operate an MWI and generate a substantial
proportion and/or quantity of pathological waste may have to
shut down. It follows that some offsite generators
generating a substantial proportion and/or quantity of
pathological waste in these subcategories may also have to
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shut down. However, closure should be even more of an
exception for offsite generators than for MWI operators.
For offsite generators, not only will closure require, as
for MWI operators, the particular conditions in individual
market segments discussed in Section 3.5.5, but the
population of facilities that are potentially affected will
be limited to those that are substantially dependent on
offsite incineration by an MWI that is smaller and less
efficient than the average commercial MWI.
It is possible, on the other hand, to estimate average
impacts for offsite generators in industry categories and
subcategories defined to consist exclusively of offsite
generators. These industry categories and subcategories
were specified in Table 6C. In Table 25, incremental annual
costs due to the NSPS are estimated for facilities in these
industry categories and subcategories that send 100 percent
of their medical waste offsite to be incinerated. The costs
are estimated by apportioning total industry medical waste
generated to subcategories according to their share of total
industry employment. This uses employment as a scale
factor, and assumes a constant ratio of medical waste
generated to employment. In reality, the relationship of
medical waste generated to employment may vary somewhat,
especially in the two groupings that are of heterogenous
composition: 1) outpatient care, which consists of
physicians' clinics and kidney dialysis facilities; and 2)
"other" laboratories, comprising medical and dental labs.
In Table 25, after disaggregating total medical waste
generated by employment, average waste per facility is
calculated. Then, based on the maximum (maximum control
costs for existing sources) joint impact of the NSPS and
Emission Guidelines on the cost of offsite incineration,
estimated in Section 3.5.5 — $25/ton under Control Option
2, $86/ton under Control Option 3, and $149/ton under
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TABLE 25. ESTIMATED INCREMENTAL ANNUAL COSTS FOR FACILITIES THAT SEND
ALL OF THEIR MEDICAL WASTE OFFSITE TO BE INCINERATED
ZSESEEXEEEXEXZEKSEXXKBEXXEEBSXEEEaXZ
—NEW MW1S--
XSEXB«8XSBXS«XXX«XSXXX3XXBEXSXBB3XXBXXSXE3X3XSEXXX3SXXBSXSEXXS3rXSSSSSBXSX=3SSE3BEaB
Hedical Estimated Incremental «nnual cost
waste Sh«re share of Medical •
generated of industry wste per per facility
annually industry medical No. of facility
(tons) eoploynent waste(tons) facilities (tons)
Nursing homes
0-19 Employees
Tax-paying
Tax-exenpt
20-99 Employees
Tax-paying
Tax-exempt
Physicians' offices
Dentists' offices I clinics
Offices
Clinics
Tax-paying
Tax-exempt
Outpatient care (clinics)
Physicians' clinicsCamb. care)
Tax-paying
Tax-exempt
Freestanding kidney dial. fac.
Tax-paying
Tax-exempt
Freestanding blood banks
Veterinary facilities
0-9 employees
Laboratories
Comnercial research
Tax-paying
0-19 Employees
Other
Medical
Dental
Funeral homes
Fire i rescue
Corrections
Federal govt.
State govt.
Local govt.
198.000
1.09X
0.61X
32.42X
7.32X
235,000 100. OOX
58.000
98.88X
0.94X
0.18X
175.000
49.77X
41.92X
6. 485.
1.84X
33.000 100. OOX
31,000
51.13X
55,500
9.29X
1U.500
69.21X
30.79X
6,000 100. OOX
11,000 100. OOX
22,000
3.06X
62.17X
34.76X
2,158
1.208
64.192
14,494
235,000
57.350
545
104
87,098
73,360
11,340
3,220
33,000
15,850
5,156
81,322
36,178
6,000
11,000
673
13,677
7,647
2,099
1.017
7,673
1.677
191,278
103,665
486
62
4,224
2,295
711
128
218
18,317
2,777
6,871
7.970
22,000
29,840
47
903
3,338
1.03
1.19
«.37
8.64
1.23
0.55
1.12
1.68
20.62
31.97
15.95
25.16
151.38
0.87
1.86
11.84
4.54
0.27
0.37
14.32
15.15
2.29
C.0.2
$26
$30
$209
$216
$31
$14
$28
$42
$515
$799
$399
$629
$3,784
$22
$46
$296
$113
$7
$9
$358
$379
$57
C.0.3
$88
$102
$719
$743
$106
$48
$96
$145
$1,773
$2.749
$1,372
$2,163
$13,018
$74
$160
$1,018
$390
$23
$32
$1,232
$1,303
C.0.4
S153
$177
$1,247
$1,288
$183
•>fl^
$82
$167
$251
$3,072
$4.763
$2.376
$3,748
$22,555
$129
$277
$1,763
$676
$41
$55
$2.134
$2.257
$197 $341
Based on $25/ton under Control Option 1, $86/ton under Control Option 2, «nd $149/ton under Control Option 3. These
are maximal, costs because it is assumed that the Emission Guidelines for existing sources are as stringent as the
NSPS for new sources.
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Control Option 4 — the incremental annual cost per facility
is calculated. This cost is the average increase in the
cost of commercial incineration to an offsite generator that
sends 100 percent of its medical waste offsite to be
incinerated. Offsite generators that are less dependent on
offsite incineration will be impacted less by the
regulation.
The facility price increase is calculated in Table 26.
For nursing homes with 0-19 and 20-99 employees, veterinary
facilities with 0-9 employees, and tax-paying commercial
research laboratories with 0-19 employees, the facility
price increase is less than the market price increase (see
Table 10) because of the influence on the market price
increase of operators of a new MWI in other subcategories of
the industry (MWI operators have relatively high control
costs and therefore drive up the market price increase).
These facility price increases are achievable because the
market price increases were deemed achievable (see Section
3.4.4).
All other offsite generators in Table 26 are in
industries in which there are no MWI operators. In these
cases, the facility price increase exceeds the market price
increase because offsite generators with less than 100
percent dependence on offsite incineration are included in
the revenue basis for the market price increase. All of
these facility price increases are considered achievable,
however. All are less than 0.4 percent (the highest is
0.397% for blood banks under Control Option 4) and none
deviate significantly from the market price increase.
The impact on earnings of full absorption of control
costs is measured in Table 27. Since all facility price
increases in Table 26 can be achieved, however, these
impacts will not come into effect.
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TABLE 26. PER-FACILITY AMNUALIZED CONTROL COSTS AS A PERCENT OF
REVENUE/BUDGET : OFFS1TE GENERATORS
••NEW MWIs--
Industry
C.0.2 C.0.3
C.0.4
Nursing homes
0-19 Employees
Tax-paying
Tax-exempt
20-99 Employees
Tax-paying
Tax-exempt
Physicians' offices
Dentists' offices I clinics
Offices
Clinics
Tax-paying
Tax-exempt
Outpatient care (clinics)
Physicians' clinics(amb. care)
Tax-paying
Tax-exempt
Freestanding kidney dial. fac.
Tax-paying
Tax-exempt
Freestanding blood banks
Veterinary facilities
0-9 employees
Laboratories
Commercial research
Tax-paying
0-19 Employees
Other
Medical
Dental
Funeral homes
Fire I rescue
O.OUX 0.047X 0.081X
0.012* 0.043X 0.074X
0.017X 0.057X 0.099X
0.017X 0.05TX 0.099X
0.006X 0.021X 0.037X
0.005X 0.018X 0.032X
0.005X 0.018X 0.031X
0.003X 0.009X 0.016X
0.029X
0.029X
0.030X
0.035X
0.099X
0.100X
0.1WX
0.121X
0.172X
0.17AX
0.180X
0.210X
0.067X 0.229X 0.397X
0.010X 0.035X 0.060X
0.013X 0.045X 0.077X
0.034X 0.118X 0.205X
0.053X 0.181X 0.313X
0.002X 0.005X 0.009X
0.002X 0.008X 0.013X
Corrections
Federal govt.
State govt.
Local govt.
0.001X 0.005X 0.008X
0.002X 0.008X 0.013X
0.002X 0.009X 0.015X
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TABLE 27. PER-FACJLITY ANNUAL 1 ZED CONTROL COSTS AS A PERCENT OF
BEFORE-TAX NET INCOME : OFFSITE GENERATORS
••NEW MUIs--
Industry
Nursing homes
0-19 Employees
Tax-paying
Tax-exempt
20-99 Employees
Tax-paying
Tax-exempt
C.0.2
0.339X
O.U6X
0.415X
0.592X
C.0.3
1.165X
1.534X
1.428X
2.038X
C.0.4
2.019X
2.658X
2.473X
3.530X
Physicians' offices
Dentists' offices t clinics
Offices
Clinics
Tax-paying
Tax-exempt
Outpatient care (clinics)
Physicians' clinicsCamb. care)
Tax-paying
Tax-exempt
Freestanding kidney dial, fac-
Tax-paying
Tax-exempt
Freestanding blood banks
Veterinary facilities
0-9 employees
Laboratories
Commercial research
Tax-paying
0-19 Employees
Other
Medicat
Dents'
Funeral home-,
Fire t rescue
Corrections
Federal govt.
State govt,
Local govt,
BXZSKEkCXgS£SrzBKCC£BXSSXSX**SB*X
N/A Not available.
O.OUX 0.047X 0.081X
0.016X 0.053X 0.092X
O.OUX 0.056X 0.097X
N/A N/A N/A
0.720X
1.043X
0.282X
0.470X
2.477X
3.588X
0.972X
1.616X
4.291X
6.216X
1.683X
2.799X
N/A
N/A
O.C26X 0.091X
0.216X 0.7UX
0.388X
O.SBiX 2.008X
0.013X 0.046X
N/A N/A
N/A N/A
N/A N/A
N/A N/A
*»«•*=*.««•«**»»«!
N/A
0.157X
1.289X
2.312X
3.479X
0.079X
N/A
N/A
N/A
N/A
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Offsite generators will have no capital control costs.
Hence no impacts indicating the availability of capital are
calculated.
3.7 IMPACTS ON MWI VENDORS
As discussed in Section 3.5.5, a major impact of the
NSPS will be to trigger substitution, especially under
Control Options 3 and 4. This is because cost-saving
alternatives to onsite incineration will be available. To
the extent that substitution occurs, the demand for
noncommercial (onsite) MWIs will be reduced. The demand for
commercial MWIs is not expected to be similarly affected
because the demand for offsite incineration will increase as
a result of the NSPS (and the Emission Guidelines).
From Table 2, it can be calculated that commercial
incineration facilities account for 64.7 percent of the
capacity of projected new unit sales over the next five
years. Hospitals account for most of the remaining capacity
— 31.9 percent. This implies — assuming there is a strong
correlation between the capacity and sales price of MWIs —
that, as a result of the NSPS, approximately one-third of
the market for new MWIs in the next five years could face
competition from alternative medical waste treatment
methods. Actual erosion of this market will depend greatly
on the extent of substitution by hospitals.
This leaves open the possibility that some MWI vendors
will go out of business. Vendors with a high degree of
concentration in noncommercial MWIs would be most
vulnerable. The business of vendors specializing in
commercial MWIs, on the other hand, should be secure.
In contrast, the NSPS will result in accelerated growth
in the markets for alternative medical waste treatment
methods such as autoclave systems.
MWI sales could also be adversely impacted if controls
for new MWIs under the NSPS are significantly more stringent
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than controls for existing MWIs under the Emission
Guidelines. This might prompt MWI operators to postpone
replacing existing MWIs with new MWIs. This is most likely
to occur if no controls are required for existing sources
under the Emission Guidelines and therefore no capital
commitment is necessary in order to continue operating an
existing MWI. Ultimately, existing MWIs will have to be
replaced, but replacement may not occur until after the
market for new MWIs has been disrupted. This, too, could
entail some MWI vendors going out of business.
3.8 IMPACTS ON TAXPAYERS
There are three primary ways in which the NSPS will
impact taxpayers. First, taxpayers will indirectly
subsidize tax-exempt debt issued by public and some not-for-
profit institutions. This is because tax-exempt debt
results in a tax-revenue shortfall for the government that
must ultimately be made up for by other taxes. Measuring
this impact is beyond the scope of this analysis. Secondly,
taxpayers will underwrite the costs to government programs
that finance health care. This impact can be grasped from
the facility price increases calculated in Tables 16A, 16B,
and 26. In the long run, it can be expected that, on
average, about 35 percent of the price increases achieved by
health care providers will be passed on to taxpayers (in the
form of higher taxes). This is because government programs
pay for about 35 percent of health care in the U.S. (in
1987, Medicare 16.2%, Medicaid 9.9%, other government
programs 8.9%).« Thirdly, taxpayers will have to pay for
the costs to public institutions. Medical waste generators
that are exclusively government-owned include correctional
facilities and fire departments. Many hospitals are also
public. In addition, it is possible that some tax-exempt
nursing homes, laboratories, outpatient clinics, and
dentists- clinics are government-owned.
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Assuming control costs are passed along to taxpayers,
Table 28 estimates per-capita impacts of the NSPS for three
of the above categories of public establishments: public
hospitals, fire and rescue operations, and correctional
facilities. Necessary government data were not available to
measure impacts for the other categories. However, public
hospitals are certain to account for most of the costs of
the regulation to public establishments.
In the U.S., six types of government units operate
public hospitals: Federal, state, county, municipal,
township, and special district. Fire departments are
operated by county, municipal, township, and special
district governments. Correctional facilities are operated
by Federal, state, county, and municipal governments. These
government units are all specified as subcategories in Table
28.
Annual control costs for hospitals in Table 28 are
taken from Table 15. State hospitals have on average 387
beds (calculated from Table 6A). In Table 15, hospitals
with 300+ beds are assigned both the Intermittent 21,000 and
the Continuous 24,000. Only the Intermittent 21,000 is
applied in Table 28. This is sufficient for the purpose of
estimating conservative impacts because its control costs
are higher. Federal and local government hospitals have on
average 296 and 113 beds, respectively, so they are assigned
the annual control costs in Table 15 applying to hospitals
with 100-299 beds (represented by the Intermittent 8,400).
Fire and rescue operations and correctional facilities
are offsite generators. The incremental annual costs of
offsite incineration estimated in Table 25 are used in Table
28. These costs reflect the impacts of both the NSPS and
the Emission Guidelines on offsite incineration, and are
based on maximum control costs for existing sources under
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the Emission Guidelines. In addition, the costs assume that
the facility sends all of its medical waste offsite to be
incinerated. Per-capita impacts will be lower for
facilities that send less than 100 percent of their medical
waste offsite to be incinerated.
Dividing per-facility costs (1989 dollars) by the
average population in 1986 of the relevant government unit
in Table 28 yields the per-capita cost of the annual cost
per facility. The number of government units is from the
1986/87 Census of Governments. The total population is used
as a substitute for the total number of taxpayers per
government unit, which is not known. Since not all
residents are taxpayers, per-capita impacts underestimate
impacts per taxpayer.
The per-capita impacts in Table 28 for Federal and
state hospitals are insignificant. However, for local
hospitals, the impacts range up to $5.75 under Control
Option 2, $26.28 under Control Option 3, and $52.28 under
Control Option 4. In each case, the highest cost is
accounted for by township hospitals. This is because
townships are the government unit with the lowest average
population (3,119). The interpretation of, for example, the
$5.75 per-capita cost for township hospitals under Control
Option 2 is as follows: if a hospital — or any other type
of facility, for that matter — operating a new Intermittent
8,400 is under the jurisdiction of a township of average
size (population 3,119), the average annual per-capita cost
is $5.75.
Some of the impacts for local hospitals under Control
Options 3 and 4, particularly those for township hospitals,
can perhaps be considered significant. However, under these
control options, the impacts of switching from an
Intermittent 8,400 to onsite autoclaving — which should
occur if control costs are prohibitive — are substantially
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lower (see Tables 20B and 20C). In addition, it is not
clear whether a hospital operating an Intermittent 8,400 —
which is likely to be a hospital of above-average size — is
likely to be under the jurisdiction of a township as small
as the average-sized township (population 3,119).
The per-capita costs for fire and rescue operations and
correctional facilities are negligible. At the most they
are only 4 cents.
3.9 IMPACTS ON SMALL ENTITIES
In accordance with the Regulatory Flexibility Act of
1980, it is necessary to determine if the NSPS will have a
"significant economic impact on a substantial number of
small entities." Small entities affected by the regulation
include small businesses, small not-for-profit
organizations, and small government jurisdictions.
The Small Business Administration (SBA) standard for a
small business is 500 employees or fewer for SIC 8731,
Commercial Physical and Biological Research (research labs),
and annual sales of $3.5 million or less for all other
industries impacted by the NSPS. The EPA "Guidelines for
Implementing the Regulatory Flexibility Act" (February 9,
1982) suggest that not-for-profit organizations are small if
they are not dominant in their field, and government
jurisdictions are small if they have a population of
50,000 or less.
According to the EPA "Guidelines," the criterion for a
"substantial number" is 20 percent or more of all small
entities impacted by a regulation.
Impacts on government units, some of which have an
average population less than 50,000 and are therefore
"small," were measured in Table 28. The only potentially
significant impacts are represented by local hospitals,
especially township hospitals, operating a new Intermittent
8,400. In an average-sized township with 3,119 residents,
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the per-capita impacts are $6.30 under Control Option 1,
$9.35 under Control Option 2, $29.88 under Control Option 3,
and $55.88 under Control Option 4. These impacts apply not
only to hospitals, but to any facility operating a new
Intermittent 8,400 in an average-sized township. The
impacts under Control Options 3 and 4 can perhaps be
regarded as significant, especially considering that
taxpayers in government units that are larger on average
(e.g., municipalities) are not similarly burdened. The
per-capita impact would be compounded if other public
facilities operating a new MWI are located in the same
township.
However, under Control Options 3 and 4, the impacts of
switching from an Intermittent 8,400 to onsite autoclaving
— which should occur if control costs are prohibitive —
are substantially lower (see Tables 20B and 20C).
Additionally, it is not clear whether a facility operating
an Intermittent 8,400 is likely to be under the jurisdiction
of a township as small as the average-sized township
(population 3,119). In any event, if there are significant
impacts, they should not apply to a "substantial number" of
small government units. This would probably be true even if
the only small government units impacted by the NSPS were
those in which a new MWI is operated. However, small
government units in which there are offsite generators —
which will pay more for offsite incineration as a result of
the NSPS (and the Emission Guidelines) — will also be
impacted. Therefore, the number of government units that
are significantly impacted should represent only a small
percentage — far less than 20 percent — of all small
government units impacted by the NSPS.
Many small businesses and small not-for-profit
organizations are represented in Tables 6A, 6B, and 6C. The
tables confirm that, with the exception of hospitals, all
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industries impacted by the NSPS consist predominantly of
small entities, according to the criteria above. It should
be noted, though, that the data in these tables represent
establishments, not firms or organizations. For the purpose
of defining a small business, for example, the firm, or the
ultimate company affiliation, is of the essence. Therefore,
Tables 6A, 6B, and 6C overstate the incidence of small
entities in the regulated industries.
The EPA "Guidelines" define a significant impact on a
small entity as any one of the following:
(1) Annual compliance costs increase total costs
of production by more than 5 percent.
(2) compliance costs (annualized, presumably) as
a percent of sales are at least 10 percent
higher than for large entities.
(3) Capital costs of compliance represent a
significant portion of capital available.
(4) The requirements of the regulation are likely
to result in closures.
Let's examine each of these four criteria.
criterion 1; Since revenue differs from costs only by
accounting profits, a facility price increase greater than
five percent approximately indicates that annual control
costs would cause total production costs to increase by more
than five percent. No such cases can be identified for
hospitals in Table 16A. Table 16B indicates, on the other
hand, that production costs would likely increase by more
than five percent at MWI-operating veterinary facilities
with 10-19 employees under Control Options 3 and 4,
veterinary facilities with 20+ employees under Control
Option 4, and commercial incineration facilities under
Control Options 3 and 4. In general, veterinary facilities
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with 10-19 employees, veterinary facilities with 20+
employees, and commercial incineration facilities are
"small" because they average less than $3.5 million in sales
(See Table 66).
However, a 5%+ increase in production costs at
commercial incineration facilities is not taken to be
significant. This is because the demand for commercial
incineration will increase as a result of the NSPS (and the
Emission Guidelines), and, as discussed in Section 3.4.3, it
is presumed that the increase in demand will be sufficient
to permit full recovery of control costs.
All veterinary facilities that would experience a 5%+
increase in production costs from controls are expected to
avoid control costs by substituting. In Table 23, the price
increase necessary to fully recover incremental substitution
costs is less than 5 percent for veterinary facilities with
10-19 employees switching from the Intermittent 2,000 and
for veterinary facilities with 20+ employees switching from
both the Intermittent 2,000 and the Pathological 2,000.
This implies that production costs would not increase by 5
percent- On the other hand, under both Control Option 3 and
Control Option 4, the price increase necessary to fully
recover incremental substitution costs is greater than 5
percent for veterinary facilities with 10-19 employees
switching from the Pathological 2,000. This is a
significant impact. However, as explained in Section 3.5.5,
it is believed that this impact is overstated because
veterinary facilities with 10-19 employees that operate an
MWI are likely to be larger than the average facility in
this subcategory represented by the model parameters in
Table 6B. Anyway, a "substantial number" of facilities will
not be impacted. There are a total of 21,496 veterinary
facilities in the U.S. Considering that average sales per
facility in even the largest subcategory, 20+ employees, are
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only $2.0 million, it is clear that the vast majority of
veterinary facilities in the U.S. are "small." Only one
veterinary facility is projected to invest in a Pathological
2,000 in the next five years. Although, as explained in
Section 3.5.5, other "pathological waste generators" that
will not operate a Pathological 2,000 may be similarly
impacted, the total number of veterinary facilities that are
significantly impacted (production costs increase by 5%+)
will still not be close to 20 percent — or even one
percent, for that matter — of the total number of "small"
veterinary facilities impacted by the NSPS.
Criterion 2; There are two countervailing differential
impacts of the NSPS. On the one hand, due to economies of
scale, the relative impact of the regulation is less for
large facilities that operate a new MWI than for small
facilities that operate a new MWI. For example, under
Control Option 2, the average ratio of annualized control
costs to revenue is 0.24 percent for hospitals with fewer
than 50 beds, and, in the high-cost case of the Intermittent
21,000, 0.04 percent for hospitals with 300 or more beds
(see Table 16A). The ratios differ by 600 percent, easily
exceeding the 10 percent criterion. On the other hand,
offsite generators -•- especially to the extent that they do
not utilize offsite incineration — are on average impacted
less by the NSPS than MWI operators. And MWIs tend to be
located at large facilities as opposed to small facilities.
This results in differential impacts favoring small offsite
generators. The net differential impacts will depend on the
comparative strengths of the two countervailing trends.
Since the majority of facilities in all industries in which
medical waste is generated are offsite generators, the net
differential impacts will most likely favor small
facilities. The exception is commercial incineration
facilities, none of which, by definition, are offsite
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generators. Although the relative impact of control costs
is likely to be greater for small commercial incineration
facilities than for large ones, facilities of all sizes are
expected to be able to pass along control costs to their
customers.
criterion 3; For MWI operators, there are a number of
cases in which capital costs might be difficult to finance
under Control Options 3 and 4. These impacts can be
avoided, however, by substituting, for which financing
should generally be available. Offsite generators do not
have any capital control costs.
Criterion 4: For the cases in which control costs are
prohibitive, the opportunity to substitute will, for the
most part, allow closure to be prevented. Depending on
particular conditions in individual market segments, there
may, under Control Options 3 and 4, be a few exceptions in
which a facility would have to shut down. Closure would
require that the facility generates a substantial proportion
and/or quantity of pathological waste, for which
substitution options are limited because it cannot be
autoclaved. In addition, the facility would either have to
face substantial competition from other MWI operators that
are not forced to substitute, or have to pay significantly
more than average for offsite contract disposal (because,
for example, it is remote from a treatment facility). In no
industry, however, should the. closure exceptions come close
to representing a "substantial" portion — i.e., 20 percent
— of all small entities impacted by the NSPS.
In summary, some "small" medical waste generators, as
well as "small" commercial incineration facilities and
government jurisdictions, may be "significantly" impacted by
the NSPS under Control Options 3 and 4. However, because
the NSPS (and the Emission Guidelines) will cause the demand
for offsite incineration to increase, it is expected that
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commercial incineration facilities will be able to recoup
control costs by passing them along to customers.
Furthermore, the number of small medical waste generators
and government jurisdictions that will be significantly
impacted should not be "substantial." This is in part due
to the opportunity that the great majority of facilities
will have to avoid the impacts of control costs by
substituting. Hence, it is concluded that the NSPS will not
have a "significant economic impact on a substantial number
of small entities."
4.0 REFERENCES
1. U.S. Environmental Protection Agency. "Medical Waste
Incinerators - Background Information for Proposed
Standards and Guidelines: Model Plant Description and
Cost Report for New and Existing Facilities." EPA-
453/R-94-045a. July 1994.
2, 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.
3. U.S. Environmental Protection Agency. "Medical Waste
Incinerators - Background Information for Proposed
Standards and Guidelines: Industry Profile Report for
New and Existing Facilities." EPA-453/R-94-042a. July
1994.
4. Commerce Clearing House, Inc. Federal Tax Guide 1992.
Chicago, IL. 1991, p. 1633.
5. U.S. Department of Commerce, Bureau of the Census.
1987 Census of Service Industries. Subject Series, pp.
1-96, 1-106.
6. American Hospital Association. Hospital Statistics.
1990-91 Edition. Chicago, IL, 1990.
7. Health Care Investment Analysts, Inc. The Sourcebook.
1990 Edition. Baltimore, MD, 1990. Excerpts provided
courtesy Peter J. Milligan, Sales Representative,
8. Dun and Bradstreet, Inc. jCndustrv Norms and Key
Business Ratios. 1990/91. New York, NY, 1991.
-137
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9. Reference 5, pp. 1-95, 1-106.
10. ' U.S. Department of Commerce, Bureau of the Census.
Survey of Current Business. July 1990, p. 91.
11. Reference 5, Appendix A, p. A-14.
12. U.S. Department of Commerce, Bureau of the Census.
Statistical Abstract of the United States. 1989.
Washington, DC, January 1989, p. 98.
13. "Earnings Make a Huge Breakthrough." Medical
Economics. September 3, 1990, p. 90.
14. Jack Faucett Associates. "Regulatory Impact and
Flexibility Analysis of Proposed Standard for
Occupational Exposures to Blood Borne Diseases --
Volume I, Industry Profiles and Technological
Feasibility Final Report." Prepared for the U.S.
Department of Labor, Occupational Safety and Health
Administration. Bethesda, MD, December 22, 1988,
p. 1-28.
15 U.S. Department of Health and Human Services, National
Center for Health Statistics. Health United States.
1986. Hyattsville, MD, 1989, p. 134.
16. U.S. Environmental Protection Agency. "Medical Waste
Incinerators - Market Profile Report." August 10,
1992,
17. Fourteenth Annual "Mulci-Unit Providers Survey."
Modern Healthcare. May 21. 1990, p. 98.
18. Reference 14, p. 1-74.
19. Reference 17, p. 90.
20. Telephone conversation, April 30, 1991, between T.
Scherer, JACA Corp., Fort Washington, PA, and a
representative of the American Association of Blood
Banks, Arlington, VA.
21. Reference 14, p. 1-96.
22. Reference 20.
23. Veterinary Medicine Publishing Co. "Selective List of
Veterinary Market, by State," Lenexa, KS, 1989.
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24. U.S. Department of Commerce, Bureau of the Census.
1988 County Business Patterns. Washington, DC, 1990.
25. Reference 24.
26. Reference 23.
27. Reference 24.
28. Reference 23.
29. "1990 Financial Survey." Veterinary Economics.
September 1990, p. 49.
30. Reference 29.
31. Reference 5, p. 1-102.
32. Reference 5, Geographic Area Series, p. US-14.
33. Reference 5, p. 1-102; Reference 32.
34. Goepel Shields & Partners Inc. "Special Situation
Research -- The Loewen Group." Vancouver, British
Columbia, Canada, May 1990.
35. PaineWebber Inc. "Rating Change -- Loewen Group." New
Yprk, NY, November 29, 1989.
36. Reference 14, p. 1-51.
37. U.S. Department of Commerce, Bureau of the Census.
1967 Census of Governments.
38. Reference 10, pp. 64, 66.
39. Reference 14, p. 1-92.
40. Reference 10, pp. 64, 66.
41. Wedig, Gerard J. "Health Status and the Demand for
Health." Journal of Health Economics. June 1988, p.
158,
42. U.S. Department of Health and Human Services, Health
Care Financing Administration. "Health Care Financing
Trends", Health Care Financing Review. Winter 1988.
43. Standard & Poor's Investment Services Corporation.
Industry Surveys. New York, NY, August 2, 1990, p.
H15.
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44. "Panel Says Dialysis Cutbacks May be Increasing Death
Toll." The New York Times. April 18, 1991, p. BIO.
45. "Red Cross Orders Sweeping Changes at Blood Centers."
The New York Times. May 30, 1991, p. Al.
46. Health Care Investment Analysts, Inc. The Sourcebook.
1989 Edition. Baltimore, MD, 1989, p. 24.
47. Reference 46.
48. American Hospital Association. Hospital statistics.
1989-1990 Edition. Chicago, IL, 1989.
49. Reference 42.
50. Reference 46, p. 22.
51. U.S. Congress, Office of Technology Assessment.
"Finding the Rx for Managing Medical Wastes." U.S.
Government Printing Office, Washington, DC, September
1990, p. 31.
52. Reference 51.
53. Reference 51, p. 30.
54. Reference 51, p. 46.
55. Reference 51, p. 56.
56. Reference 51, pp. 55-57.
57, Reference 51, p. 47.
58, "Costs for Alternative Methods of Medical Waste
Treatment." Memorandum submitted by S. Shoraka,
Midwest Research Institute, to K. Durkee, U.S.
Environmental Protection Agency, ESD/ISB. November 14,
1991. Page 7.
59. Reference 51, p. 31.
60, Reference 58, p. 9.
61, Reference 51, pp. 29, 30.
62. Reference 42.
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ADDENDUM TO THE ANALYSIS OF
ECONOMIC IMPACTS FOR NEW SOURCES
1.0 INTRODUCTION
Three control options — Control Options 2, 3, and 4 —
were assessed in the Analysis of Economic Impacts for New
Sources. The most stringent, Control Option 4, consisted of
a dry injection/fabric filter system with carbon injection
and two-second combustion. In this addendum to the Analysis
of Economic Impacts for New Sources, a fifth, more-stringent
control option — "Control Option 5" — is evaluated. Control
Option 5 has the same requirements as Control Option 4, but
also requires continuous emissions monitoring (CEM).
This addendum is organized to facilitate comparison
with the Analysis of Economic Impacts for New Sources, and
particularly to facilitate analysis of the incremental
impacts of Control Option 5 over Control Option 4. Many of
the tables in the Analysis of Economic Impacts for New
Sources are employed. They differ in this addendum only in
that they present Control Options 4 and 5. rather than
Control Options 2 through 4. Otherwise they are the same
(same table numbers, titles, headings, etc.). The tables in
this addendum do not run in consecutive numbers because, for
purposes of evaluating Control Option 5, it is not necessary
to reproduce all of the tables in the Analysis of Economic
Impacts for New Sources. One table in this addendum is new:
Table 20D.
2.0 SUMMARY OF ECONOMIC IMPACTS UNDER CONTROL OPTION 5
Nationwide total annualized control costs of the NSPS
almost double from $110.6 million under Control Option 4 to
$215.3 million under Control Option 5,. If the Emission
Guidelines are the same stringency as the NSPS, total
annualized control costs of the NSPS and Emission
Guidelines, combined, slightly more than double from $827.4
Add-:
-------
million under Control Option 4 to $1,666.9 million under
Control Option 5.
The primary impact of Control Option 5 will be to
prompt substitution. Already under Control Option 4, it is
estimated that there is a cheaper alternative (either onsite
autoclaving or offsite contract disposal) to 100 percent of
new onsite MWI capacity. While substitution may already be
the accepted practice under Control Option 4, it is even
more likely to take place under Control Option 5.
While substitution will be prompted because it is cost-
saving . it will also be necessary for many MWI operators
because control costs are prohibitive. This applies under
Control Option 5 to the same cases identified under Control
Option 4: hospitals with fewer than 50 beds, hospitals with
50-99 beds, certain categories of hospitals with 100+ beds,
nursing homes with 100+ employees, veterinary facilities
with 10-19 employees, veterinary facilities with 20 +
employees, tax-paying commercial research labs with 20-99
employees, and tax-exempt commercial research labs. These
cases represent all but the largest medical waste
generators.
For the most part, substitution will avoid these
significant impacts. Still, the incremental cost of
substitution is significant for facilities switching from a
pathological MVfl (represented by the Pathological 2,000) to
offsite contract disposal in several cases: veterinary
facilities with 10-19 employees (Control Options 3, 4, and
5), tax-paying commercial research labs with 20-99 employees
(Control Options 3, 4, and 5), and veterinary facilities
with 20+ employees (Control Option 5). Though significant,
these impacts are not taken to, in general, imply closure.
Already in these industries, the great majority of
facilities have demonstrated that they can survive without
onsite incineralion (97.4% all veterinary facilities, a
minimum of 86.9* of all commercial research labs).
Add-2
-------
However, a few of these facilities, as exceptions, may
find substitution costs prohibitive and therefore would have
to close. Closure would require that the facility generates
a substantial proportion and/or quantity of pathological
waste, for which substitution options are limited because it
cannot be autoclaved. In addition, the facility would
either have to face substantial competition in its market
segment from other MWI operators that are not forced to
substitute (because, for example, they operate larger, more
cost-effective MWIs), or have to pay significantly more than
average for offsite contract disposal (because, for example,
it is remote from a treatment facility). The number of
exceptions is sure to be higher under Control Option 5 than
under the less-stringent Control Option 4.
Substitution will also avoid some industry-wide impacts
found to be significant under Control Option 5 but not under
Control Option 4. Under Control Option 5, if the combined
effects of the NSPS and Emission Guidelines are considered,
and it is assumed that the Emission Guidelines are the same
stringency as the NSPS, industry-wide output and employment
could decline by up to 1.9 percent at veterinary facilities
and 1.6 percent at commercial research labs. With
substitution, the imparts are less than -1 percent.
The vast majority of medical waste generators do not
operate an onsite MWI. Those that send their waste offsite
to be incinerated are estimated to see an increase in cost
of $32-149/ton under Control Option 4 and $52-259/ton under
Control Option 5. The low end of each range reflects the
impact of the NSPS alone. The high end considers the
interactive effect of the Emission Guidelines, assuming that
they are as stringent as the NSPS. For all industry
categories and subcategories defined to consist exclusively
of medical waste generators that do not operate an MWI, both
cost increases can be recovered with a price increase under
Add-3
-------
one percent even if all medical waste generated is
incinerated offsite.
Finally, the NSPS will continue under Control Option 5
to not have a "significant economic impact on a substantial
number of small entities." A good number of small entities
are significantly impacted by controls, but most significant
impacts can be avoided by substituting. While some small
facilities will continue to have significant impacts, in no
case will the number of significantly impacted facilities be
close to "substantial" (i.e., 20% or more of all small
entities impacted).
3.0 CONTROL COSTS
Per-MWI control costs under Control Options 4 and 5 are
presented in Table 4. The increase in capital control costs
from Control Option 4 to Control Option 5 ranges from 22.3
percent for the Continuous 36,000 and Intermittent 21,000,
to 37.7 percent for the Batch 250. The increase in total
annualized control costs is likewise inversely related to
MWI size — while total annualized control costs for the
Continuous 36,000 increase by 42.4 percent, they more than
double for the three smallest MWIs, the Pathological 2,000,
Intermittent 2,000, and Batch 250.
4.0 INDUSTRY-WIDE IMPACTS OF CONTROLS
4.1 INDUSTRY-WIDE ANNUALIZED CONTROL COSTS
The first two columns of Table 8A show that nationwide
total annualized control costs of the NSPS almost double
from $110.6 million under Control Option 4 to $215.3 million
under Control Option 5. While Table 8A considers only the
effect of the NSPS on new MWIs ("minimum control costs for
existing MWIs," i.e., no control costs for existing MWIs),
Table 8B assumes that existing MWIs are controlled at the
same level by the Emission Guidelines as new MWIs are
controlled by the NSPS ("maximum control costs for existing
MWIs"), and adds the costs for existing MWIs to the costs
Add-4
-------
TABLE 4. CONTROL COSTS FOR NEW MWIs (1989 DOLLARS)
Capital
Model MWI
Cont.
Inter.
Cont.
Inter.
Path.
Inter.
Batch
36
21
24
8
2
2
,000
,000
,000
,400
,000
,000
250
C.0.4
795
795
675
579
490
482
469
,268
,268
,575
,543
,428
,992
,312
C.O
972,
972,
852,
756,
667,
660,
646,
.5
374
374
681
649
534
098
418
Total annualized
C.O. 4
318,
247,
202,
163,
116,
120,
115,
671
958
891
047
127
883
247
C.O. 5
453
400
338
315
268
273
267
,781
,429
,001
,518
,598
,354
,718
Abbreviations: Cont. = Continuous,
Path. = Pathological.
Inter. = Intermittent,
Add-5
-------
IA1LI M CAtCUAIIOM Of MCI IMWSIIf-UIDf AIMUMUIO CUMIIOl COilS: HI nil** tun III* Uttll fOi flUIIM NUU
ma wit-
Hospitals
•ursine ksaas
Veterinary laellUlee
Laboratories
Cea»erclal reeearcli
Nodical/denial
funeral koam
•kyelclans' oil Ice*
•enlists* oMIcea t clinics
Outpatient care
f reeslenllnt, Meal banks
fire t reset* operations
Correctlonel lacllllles
Coaverclal Incineration fee.
Older
Industry
control
C.0.4
77.141
2.211
Rl
0
0
0
0
0
6
U
0
24.SU
0
r-Hlde annual lied
costs (( Ikous.)
C.O.i
1*1.014
4.941
I.US
10.414
0
0
0
0
«
4
0
14.941
Control cotlt
Portion ol potted along la olUlte Sh.re el Ike
cotlo poised venerators It Ikousondl cu«*ercist
•lone lo oil- Incineration
alia aonereiera C.O.4 C.O.i cost pool
in 7.784 14.101 S7.I71
in 222 494 l.iM
in 72 144 1.14X
M7 1.04* 2.1«
o ?fx
10. 44X
2. sax
7.78X
I.47X
0.491
O.VBX
IOOX 24.411 14.941 O.OOX
0 6XX
JJ Hi «.9fJ 100 OCX
•Itsl
cool
C.0.4
19,111
2.U4
444
711
1.711
M
1.444
1W
2.J7*
417
142
in
0
271
U.Hi
ncreamilel
to Incinerollon
a It Ikeusand)
C.O.i
M.4»
4.J2*
710
1.1 J«
2.770
141
i.414
1.147
4.1/1
77*
240
SI*
0
44%
S2.971
H« t 1
orwiual
C«MIB
C.0.4
.V.2S4
4.110
1.091
i]ni
i«
1.444
lii
2.4W
*«/
\6f.
12S
0
271
110.404
lued cuiiirt
It Ikouaei
C.O.i
I77.M7
«.*»S
2.112
10. r>4
2.770
141
4.1J4
1.M7
4.121
77*
1
XJ
XJ
Ik* boxllcM (no control caott) lor tnUlint MUls.
-------
IMIC n. r».icui.a.tio* or MI IMNKT*T-UIOC furMMimo CONTHOI costs: MKIWM CONIIOI costs fat tmttic MIU
KIU HUll
Industry-tilde annualired Control cost*
control rovts Portion of passro1 along to offsile
ft thousand) co*tt passed arneratorc (1 thousand)
rtoapitala
tturalnf hoars
Veterinary facilities
laboratories
Commercial research
Medical/dental
funeral hnwi
Physicians' offices
Dentists' offices i clinics
'• Outpatient care
*• freestanding blood banks
(Ire 1 rescue operations
Correctional facilities
Comrrcial incin. fac.
Other
total
519, 102
44.144
48.546
74.711
0
0
0
0
Si
0
0
0
74.884
0
B27.409
I.IO/.oOC lot 5S.910 110.260
145.707 10X 6.616 14.571
151.178 10X 4.855 15.J11
158.18? 10X 7.*71 15.818
0
0
0
0
0
0
0
0
107.551 10OX '6.884 107.551
0
1.444.871 151.917 ?41.485
Share of the
comierc lal
Incineration
cost pool
57.87X
8.55X
1.I4X
5!?JX
0.77X
I0.45X
?.5BX
7.78X
1.47X
0.49X
0.98X
O.OOX
O.B4X
100. OOt
Incremental
offslte incineration
costs ft thousanl)
C.0.4
87.9?4
1?,991
2.014
1.267
7.944
410
15.877
1.9?0
11.821
2,211
744
1.489
0
1.274
151.917
C.0.5
152.479
22.528
1,511
5.445
11.780
711
27,514
4.798
20.499
1.871
1.291
2.58?
0
2.211
241.485
•el Industry-Hide
annual Ifed control
coita ft thousand)
C.0.4
571.117
72.518
41.727
72.108
7.944
410
15.877
1.920
11.871
2.211
744
1,489
0
1.274
827.409
C.0.5
1.144,819
151.214
141. 5?4
148.029
11.780
711
?7,514
4,798
70.499
1.871
1.791
2.58?
0
2.211
1.464.871
the SHOT control strl
V for eiilttinf MIU wider the C»t$*fon Guidelines as for new MM* wirier the NSPS.
-------
for new MWIs. This recognizes that the NSPS and Emission
Guidelines are not independent. In Table 8B, total
annualized control costs of the NSPS and Emission
Guidelines, combined, slightly more than double from $827.4
million under Control Option 4 to $1,666.9 million under
Control Option 5.
The commercial incineration cost pool (i.e., total
annualized control costs that will be passed along to
offsite generators) in Table 8A increases from $33.1 million
under Control Option 4 to $53.0 million under Control Option
5. Considering that an estimated 317,270 tons of capacity
at new MWIs will be used for commercial incineration, this
comes to $104/ton under Control Option 4 and $167/ton under
Control Option 5. These are the per-ton increases in
offsite incineration costs at new commercial MWIs under
Control Options 4 and 5.
Net (of commercial incineration) industry-wide
annualized control costs are shown in the last two columns
of Tables 8A and 8B.
4.2 MARKET PRICE INCREASE
Market price increases under Control Options 4 and 5
are calculated in Table 10. In the Analysis of Economic
Impacts for New Sources, all market prices under Control
Option 4 were considered achievable because they are less
than one percent. Under Control Option 5, two market price
increases in the case of maximum control costs for existing
MWIs (veterinary facilities, commercial research labs)
exceed one percent. However, at less than two percent, they
are also considered achievable.
4.3 CONSEQUENCES OF THE MARKET PRICE INCREASE
4.3.1 Output Impacts
Table 11 shows the impact of the market price increase
on industry-wide output assuming maximum control costs for
existing MWIs. While all impacts under Control Option 4 are
less than -1 percent and were (in the Analysis of Economic
Add-8
-------
TABLE 10. NET INDUSTRY-WIDE ANNUAL1ZED CONTROL COSTS AS A PERCENT OF REVENUE/BUDGET
••NEW MWIf-
Industry
Hospitals
Nursing homes
Veterinary facilities
Laboratories
Commercial research
Medical/dental
Funeral homes
Physicians' offices
Dentists' offices & clinics
Outpatient care
Freestanding blood banks
Fire I rescue operations
Correctional facilities
Nininun
<
C.0.4
o.wox
0.015X
0.01SX
0.046X
0.023X
0.001X
0.004X
0,003X
0.017X
0.039X
0.001X
0.001X
control costs fc
existing KUIs
C.0.5
0.079X
0.02BX
0.029X
0.091X
0.036X
O.OOU
0.006*
0.005%
0.027X
0.063*
O.OC2X
0.002X
>r Max i nun
i
C.0.4
0.256X
0.226X
0.859X
0.610X
0.104X
O.OOAX
0.017X
O.OUX
0.079X
0.180X
0.006X
0.006X
control costs for
existing MUls
C.0.5
0.512X
o.4m
1.907X
1.250X
0.180X
o.oon
0.029X
0.025X
0.137X
0.313X
0.010X
o.onx
Add-9
-------
TABLE 11. INDUSTRY-WIDE OUTPUT IMPACTS
—NEW MWIS-
OF THE MARKET PRICE INCREASE
»»««««««««*««*s«««re»««»*s«KsssrKM«ss»«M«s*««B««"«"««««
Price elasticity
of demand
Industry
Hospitals
Nursing hones
Veterinary facilities
Laboratories
Commercial research
Medical /dent at
Funeral homes
Physicians' offices
Dentists' offices I clinics
Outpatient care
Freestanding blood banks
Fire I rescue operations
Correctional facilities
Nax.
-0.33
-0.67
-1.00
-1.33
•1.33
-0.33
-0.33
•0.67
•0.33
•0.33
•0.33
•0.33
Min.
0.00
-0.33
-0.67
-1.00
•0.67
0.00
0.00
-0.33
0.00
0.00
0.00
o.oc
Max.
C.0.4
•0.084X
•0.151X
•0.8S1X
•0.806X
•0.138X
-0.001X
•0.005X
-0.010X
•0.026X
-0.059X
-0.002X
-0.002X
Percent change in output
elasticity
C.0.5
-0.168X
-0.318X
•1.871X
•1.638X
•0.239X
-0.002X
•0.010X
-0.017X
-0.045X
•0.103X
-0.003X
•0.004X
Min.
C.0.4
O.OOOX
-0.074X
-0.571X
-0.607X
•0.070X
O.OOOX
O.OOOX
-o.oosx
O.OOOX
O.OOOX
O.OOOX
O.OOOX
elasticity
C.0.5
O.OOOX
-0.157X
-1.258X
-1.234X
•0.121X
O.OOOX
O.OOOX
-0.008X
O.OOOX
O.OOOX
O.OOOX
O.OOOX
Based on maxinxjr, control costs fo existing M'-Vls.
Add-10
-------
Impacts for New Sources) considered insignificant, two
impacts under Control Option 5 exceed -1 percent: industry-
wide output could fall by up to 1.9 percent at veterinary
facilities and 1.6 percent at commercial research labs
(maximum elasticities). While these impacts are not likely
to require industry restructurings, they could be considered
significant. However, later, in Section 6.2, it will be
seen that these impacts can be avoided by switching to an
alternative medical waste treatment and disposal method.
4.3.2 Employment and Revenue Impacts
Table 12 shows that the estimated employment impacts of
a loss of 1.9 percent of industry-wide output at veterinary
facilities and 1.6 percent of industry-wide output at
commercial research labs are -1,944 and -2,253,
respectively. They represent, by definition, -1.9 percent
and -1.6 percent, respectively, of baseline industry-wide
employment. Again, however, it will be seen in Section 6.2
that these impacts can be avoided by substituting. All
other employment impacts under Control Option 5 are small in
relation to baseline employment.
As under Control Option 4, under Control Option 5,
industry-wide revenue decreases only for commercial research
labs and medical/dental labs in the case of the maximum
elasticity (Table 13). The decreases are insignificant in
relation to baseline industry-wide revenue.
5.0 PER-FACILITY IMPACTS OF CONTROLS FOR MWI OPERATORS
5.1 PER-FACILITY CONTROL COSTS
Per-NWI control costs were presented in Table 4. Using
the scheme developed in the Analysis of Economic Impacts for
New Sources to link per-MWI control costs to model
facilities, per-facility control costs for MWI operators
under Control Options 4 and 5 are presented in Tables 14 and
15.
Add-11
-------
TABLE 12. INDUSTRY-WIDE EMPLOYMENT IMPACTS OF THE MARKET PRICE INCREASE
•-New KUIs—
Industry
Hospitals
Nursing homes
Veterinary facilities
Laboratories
Commercial research
Medical/dental
Funeral homes
Physicians' offices
Dentists' offices t clinics
Outpatient care
Freestanding blood banks
Fire I rescue operations
Correctional facilities
Price (
of
Max.
•0.33
-0.67
-1.00
-1.33
•1.33
•0.33
-0.33
-0.67
•0.33
•0.33
-0.33
•0.33
elasticity
demand
Min.
0.00
-0.33
-0.67
-1.00
-0.67
0.00
0.00
-0.33
0.00
0.00
0.00
0.00
Max.
C.0.4 C
(3.340) (6
(2,012) (4
(684) (1
(1,108) (2
(182)
(2)
(57)
(47)
(52)
(8)
(6)
(9)
Change i
elasticity
.0.5
,661)
,240)
,944)
,253)
(316)
(4)
(98)
(82)
(91)
(14)
(10)
(15)
n employment
Min.
C.0.4
0
(991)
(593)
(834)
(92)
0
0
(23)
0
0
0
0
elasticity
c.o.s
0
(2,090)
(1,306)
(1.697)
(159)
0
0
(40)
0
0
0
0
Based on maximum control costs for existing HUIs.
Add-12
-------
TABLE 13. INDUSTRY-WIDE REVENUE/BUDGET IMPACTS OF THE MARKET PRICE INCREASE
•-NEW MWIs--
Price elasticity
of demand
Industry
Hospitals
Nursing homes
Veterinary facilities
laboratories
Conroerciat research
Medical/d-ntal
Funeral homes
Physicians' offices
Dentists' offices I clinics
Outpatient care
Freestanding blood bankr
Fire I rescue operations
Correctional facilities
Max.
-0.33
•0.67
•1.00
•1.33
•1.33
•0.33
•0.33
•0.67
•0.33
-0.33
•0.32
•0.33
Min.
0.00
-0.33
-0.67
•1.0C
•0.67
0.00
0.00
•0.33
0.00
0.00
0.00
O.OD
Change In revenue/budget ($ thousand)
Max. elasticity
C.0.4
S383.827
S23.920
SO
($23.765)
($2,620)
$275
$10,638
$1.294
$7,919
$1,496
$499
$998
C.0.5
$766,382
$50,480
($0)
($48,447)
($4,542)
$477
$18,447
$2,243
$13,731
$2,594
$86'.
$1,730
Min.
C.0.4
$573,117 $1
148,582
$20,970
($0)
$2,621
$410
$15,877
$2.626
$11,821
$2,233
$744
$1,489
elasticity
C.0.5
,144,819
$102,573
$46,408
($0)
$4,545
$711
$27,534
$4,554
$20,499
$3,673
$1,291
$2,582
e
Based on •raximum control costs for existing HWIs.
Add-13
-------
TABLE H. CAPITAL CONTROL COSTS FOR MODEL fACILITIES(1989 DOLLARS)
--NFU MWIs--
Intermittent Mil Batch MUI Continuous MUI Pathological MWI
Industry/subcategory C.O.* C.0.5 C.0.4 C.0.5 C.O.* C.0.5 C.O.* C.0.5
Hospitals
300* beds
100-299 beds
50-99 beds
<50 beds
Nursing homes
Veterinary facilities
Research laboratories
Tax-paying
100* emp.
20-99 emp.
Tax-exempt
Commercial incineration fac.
795.268 972,37*
579.543 756,649
482,992 660,098
488.356 665.462
482.992 660,098
795.268 972.37*
482,992 660,098
579.543 756.649
469,312 646.418
675.575 852.681
675,575 852,681
1,590.536 1,944,748
490,428 667.53*
490,428 667,53*
490.428 667.534
Q.
CL
-------
TABIE 15. ANNUAUZEO CONTROL COSTS FOR MOOEl t ACIUTIES(19B9 OOUARS)
--NEW MUls-
= iri=========s===r==««««=««»s«»==E=r««««»««a=«=«=========-====-
Intermittent MUI Batch MUI
Industry/subeategory C.0.4 C.0.5 C.0.4 C.0.5
Continuous NUI
C.0.4 C.0.5
Pathological NUI
C.0.4 C.0.5
H°300»"beds
100-299 beds
50-99 beds
<50 beds
Nursing homes
Veterinary facilities
Research laboratories
20-99 eim>.
Tax-e*e«pt
Conraercial incineration fee.
Z47.958
163.047
120. B8I
123,225
120.883
400.429
315.518
273,354
275.698
273.354
202,891 338,001
115.247 267.718
247.958 400.429
120.883 273.354
163.047 315.518
202.891 338.001
637.342 907.562
116,127 268,598
116,127 268.598
116.127 268.598
CL
O.
-------
5.2 FACILITY PRICE INCREASE
The facility price increase is calculated for hospitals
in Table 16A and for other MWI operators in Table 16B.
Under Control Option 5, it becomes even more likely than
under Control Option 4 that hospitals with fewer than 100
beds will not be able to achieve the facility price
increase. For hospitals with fewer than 50 beds, the
average facility price increase under Control Option 5 is
6.72 percent. For hospitals with 50-99 beds, it ranges from
2.95 to 3.01 percent. In general, hospitals with 100 or
more beds should still be able to achieve the facility price
increase, considering that it averages 1.01 percent, which
is less than one percentage point greater than the market
price increase (0.512% in the case of maximum control costs
for existing MWIs — see Table 10). As under Control Option
4, there are some subcategories of hospitals with 100 or
more beds that are exceptions, however (e.g., t.b.
hospitals) ,
The facility price increase may not be achievable in
Table 16B in the same cases under Control Option 5 as under
Control Option 4: nursing homes with 100-t- employees,
veterinary facilities with 10-19 and 20-*- employees, tax-
paying commercial research labs with 20-99 employees, and
tax-exempt commercial research labs. This is because the
facility price increase exceeds the market price increase
(based either on maximum or minimum control costs for
existing MWIs) by more than one percent. The exceedances
are greater under Control Option 5 than under Control Option
4, indicating that it is even more likely that the facility
price increase cannot be achieved.
5.3 COST ABSORPTION
Tables 17A and 17B demonstrate that the impact on net
income of full control cost absorption is significant for
all of the identified cases in which the facility price
increase may not be achievable.
Add-16
-------
TAIL! 16*. m-FAdim AKWJAUICO COHTIOl COSTS AS A KICMT OF UVIMUC : MOSHTAIS
Intermittent MWI
Industry category
AKA- registered
Federal
Psychiatric
Other special t general
<50 leos
50-99 led.
100-299 IMS
300* leds
ken-federal
•sychietric
Ket-for-prefit
Fer-prof it
State gevt.
local govt.
1.1. 1 other retp. diseases
long-term ether special t gen.
Not-for-profit
For-prom
State govt.
local gevt.
Short-ten* ether special t gen.
not-for-profit
<50 led!
50-99 lees
100-299 IMS
300- IMS
For -pre' i t
<50 IMS
50-99 IMs
100-299 IMS
300* IMs
State govt .
<50 IMS
50-99 IMS'
IOC- 299 lee*
300- IMs
local gov:.
«5C IMS
50-99 IMs
100-299 leci
300- lees
Hor-AtA-rtgistertt!
don-Feete'il psychiatric
Short-term ether special I gen.
Other
Ion:
<;: lee*
50-99 led*
100-299 leds
300- leds
C.0.4
0.491
0.671
0.421
0.27*
1.071
1.321
0.821
0.721
1.671
0.981
0.921
0.911
0.861
1.221
0.451
0.21X
1.101
0.561
0.331
1.361
0.461
0.1!X
1.6fX
0.64X
0.18X
1.891
2.011
1.35X
0.501
1.331
0.52X
0.241
C.0.5
0.801
1.521
0.811
O.U1
2.421
2.991
1.331
1.161
3.241
1.891
2.091
1.771
1.381
2.751
O.UX
0.34i
2.49i
i.oei
0.53X
3. on
0.89X
0.241
3.811
1.241
0.301
4.271
4.551
2.601
0.97X
3.011
1.011
0.391
t
latch, continuous,
or pathological MM
C.0.4
0.401
1.391
0.451
0.221
1.031
1.271
0.671
0.591
0.891
0.701
2.681
1.171
0.171
2.511
1.061
0.271
3.211
1.301
0.121
4.021
1.621
0.151
1.811
1.931
2.891
1.281
0.201
e.o.5
0.671
3.221
1.501
0.371
2.381
2.941
1.121
0.981
2.051
1.171
6.221
2.701
0.29X
5.831
2.451
0.451
7.461
3. OH
0.201
9.331
3.741
0.251
4.2C1
4.471
6.721
2.951
0.331
<5C leds
50-99 leds
100-299 IMs
300* IMs
lural
<50 IMs
50-99 IMS
10C-299 IMS
300* leds
0.291 0.561
1.231 2.781
1.181 2.731
T»bl» 15 Indicttn
«fc'ic«Ble.
type ef wl •• batch, continuous, or pathologies'. -• is
Add-17
-------
TABLE 166. PER-FACIL1TY ANNUALIZED CONTROL COSTS AS A PERCENT OF REVENUE/BUDGET :
MW1 OPERATORS OTHER THAN HOSPITALS
-•NEW MWU--
Batch, continuous,
Intermittent NWt or pathological MW1
Industry
Nursing homes
100* Employees
Tax -pay ing
Tax-exempt
Veterinary facilities
10-19 Employees
20+ Employees
Commercial research labs
Tax-paying
20-99 Employees
100* Employees
Tax-exewpt
Comnercial incineration fee.
C.0.4
3.52X
2.53X
13.31X
6.15X
«.32X
0.81X
1.21X
C.0.5
7.MX
5. MX
30.09X
13.90X
9.76X
1.31X
2.35X
C.0.4 C.0.5
12.78X 29.57X
5.91X 13.66X
4.15X 9.59X
0.67X 1.11X
31.87X 45.38X
a
Table IS indicates which type of HUI -• batch, continuous, or pathological -- is applicable.
Add-18
-------
LI m. m-rAciim AHMUXLIZIS CONTROL COSTS AS * PIKCEIC or nrr mco« : HOSPITALS
. --KIV MWIS--
...............••••••••••"•"•••" fe
latch, continuous,
Intermittent MWI or pathological MWI
cot COS C.O.4 C.C.5
Industry category c-°-4 c<0-'
11.91% 11.14%
56.65% 111.60%
26.42% 41.11*
1.14% 1C.22%
10.27% 70.01%
26.15% 60.41%
19.11% }}.00%
17.11% 21.14%
23.24% 53.76%
19.99% 11.10%
111.11% 256.12%
4.02% 6.70%
n.n. n.H.
1.64% 6.49%
111.11% 104.56%
53.15% 122.93%
1.11% 5.54%
163.61% lt:.7C%
;c:srB.e, 66.76% ." 49% 66 05% 152.76%
Inr?ocBa>**si 16>1B\ 3 *•3**
wC"«¥»B*-i **•• « »•»
JOC. Bee. 5.07% • !«% «•»» • 91»
Nor.-AEA-rejltteree
Nor.-ree.r.: p.yec.U-.rie 51.55% 125.»% 53.17% .44%
Short t.r= cth.r spec:.: « g. 56.10% JH.»% ».20% 129.99%
Other "•!« 75'::v
-,,.- 14.56% 26.:i%
•"!' 116.41% 121.56%
„:„ i«. 63.63% 143.69% 61.13% 141.36%
IOC 299 Bee, ».i»» J« 50%
300. Bee, 567% 9.S% « 64% 7.73%
Subset:cetwj«lty hot;.
Urban 1-55% 16.Si%
<50 Bedt
50-99 Beet
109-299 Boil
Federal
Psychiatric
Other special t general
<50 Beds
50-99 Beds
100-299 Beds
300* Bods
Don- federal
Psychiatric
not-for-profit
Tor-profit
Star* govt.
Local govt.
T.B. t ether reap, diseases
long- tars other special * gen.
not-for-profit
For-pref it
State govt.
Local govt.
Short-tens other special * gen.
not-for-profit
<50 Beet
50-99 Bedt
100-299 Beet
300' Bedt
For-proflt
<50 Beet
5C-99 Bees
1CO-299 Bees
Id* Bees
State govt.
»dl
Oiviior H b«for»-t4uc n«t IneoM wcvpt for T.B. ho»plt«i», hoipltcl* net
r*giit«r«£ with th» WU, "Tot*!" («ntf §abeit«ser:*i!. «nO eossanity notpitilt,
(or w^.lc^ only «ft«r-t«x nmt Inroe* H availatl*.
15 indicates which type of MW: -- bats!-., continuous, or pathological -• is
N.N. tie: >3eanir.;ful.
Add-19
-------
TABLE 17B. PER-FAC1LITY ANNUAL I ZED CONTROL COSTS AS A PERCENT OF BE FORE-TAX NET INCOME :
MUI OPERATORS OTHER THAN HOSPITALS
-•NEW MWIc—
Industry
Commercial research labs
Tax-paying
20-99 Employees
100* Employees
Tax-exempt
Commercial incineration fac.
Intern!ttent MWI
C.O.* C.0.5
71.95X 162.69*
13.56X 21.89X
28.86X 5S.85X
latch, continuous,
or pathological NWI
C.0.4
C.0.5
Nursing homes
100* Employees
Tax-paying
Tax-exempt
Veterinary facilities
10-19 Employees
20+ Employees
88.05X
90.33X
34.56X
15.97X
197.01X
202. 11X
78.16X
J6.11X
33.20X 76.80X
15.3iX 35. 48%
69.12X
11.09X
N/A
159.86X
18.48%
N/A
Table 15 indicates which type of MUI
N/A Not available.
•- batch, continuous, or pathological -- (a applicable.
Add-20
-------
5.4 CAPITAL AVAILABILITY
Tables ISA, 18B, 19A, and 19B capture some of the
impacts of capital control costs on MWI operators. Table
ISA shows that it is even more likely under Control Option 5
than under Control Option 4 that hospitals with fewer than
100 beds will need external financing (the ratio of capital
control costs to net income exceeds 100%). While in general
this is still not the case for hospitals with 100+ beds (the
average ratio under Control Option 5 is 70.75% for hospitals
with 100-299 beds, and ranges from 18.20% to 22.25% for
hospitals with 300+ beds), there are some subcategories of
hospitals with 100+ beds that do have ratios exceeding 100
percent (e.g., t.b. hospitals).
Table 19A shows, in turn, that, in general, only
hospitals with fewer than 50 beds may, under both Control
Options 4 and 5, have difficulty obtaining financing (the
ratio of capital control costs to total liabilities exceeds
20%). However, three subcategories of hospitals with 50-99
beds also have ratios over 20 percent under Control Option
5: local government hospitals, non-Federal psychiatric
hospitals not registered with the AHA, and short-term other
special and general hospitals not registered with the AHA.
So,, some hospitals with 50-99 beds may have difficulty
obtaining financing.
Table 18B shows that, as under Control Option 4,
nursing homes with 100+ employees, veterinary facilities
with 10-19 employees, tax-paying commercial research labs
with 20-99 employees, and tax-exempt commercial research
labs may require external financing under Control Option 5
(and the likelihood of requiring it is greater than under
Control Option 4).
Table 19B shows, in turn, that in all of these cases
under Control Option 5, external financing may be difficult
to obtain (because the ratio of capital control costs to
total liabilities exceeds 20%).
Add-21
-------
TAIIE 16A. PEH-FACILITT CAPITAL CONTtOl COSTS AS A PEtCENT OF NET INCWE : HOSPITALS
••NEW MWlf
Intermittent MUI
latch, continuous,
or pathological KW1
Industry category
AHA- registered
Ftdtral
Psych fatrlc
Other special 1 general
-------
TABLE 188. PER-FAC1LITY CAPITAL CONTROL COSTS AS A PERCENT Of BEFORE-TAX NET INCOME
HWI OPERATORS OTHER THAN HOSPITALS
-•NEW MWIs--
Batch, continuous,
Intermittent KWI or pathological HWI
Industry C.0.4 C.0.5
C.0.4 C.0.5
Nursing homes
100* Employees
Tax-paying J48.97X 475.52X
Tax-exempt 356.00X 4S7.84X
10-19 Employees
20+ Employees
Commercial research tabs
Tax-paying
20-99 Employees
100* Employees
Tax-exempt
Commercial incineration fac.
138.1 OX
63. BOX
287. 46X
43.48X
102. 59X
168. 73X
87.20X
392. 8n
53.16X
133. 9«
140. 22X
64.78X
291.89X
36.93X
N/A
190. 86X
88.18X
397.30X
46.61X
N/A
a
i
Table 14 indicates which type of MW1 •- batch, continuous, or pathological •• is
•pplicable.
N/A Not available.
Add-23
-------
TABLE 19A. PER-FACIL1TY CAPITAL CONTROL COSTS AS A PERCENT OF TOTAL LIAIILITIES
HOSPITALS
••NEW NWU--
Inductry category
Intermittent MWI
C.0.4 C.O.S
Bitch, continuous,
or pathological MWI
C.0.4 C.O.S
AHA- registered
Federal
Psychiatric
Other special ( general
«SO led*
50-99 Beds
100-299 Beds
SOCK Beds
Non-federal
Psychiatric
Not-for-profit
For-profit
State govt.
Local 9ovt.
T.B. I other resp. diseases
Long-term other special i 9en.
Not-for-profit
For-profit
State sovt.
Local govt.
Short-term other special i 9en.
Not-for-profit
<50 Beds
50-99 Beds
100-299 Beds
300« Beds
For-profit
-------
TABLE 19B. PER-FAC1LITY CAPITAL CONTROL COSTS AS A PERCENT OF TOTAL LIABILITIES :
MWI OPERATORS OTHER THAN HOSPITALS
-•NEW KUIS--
latch, continuous,
Intermittent MWI or pathological HWI
industry C'0-L.±?:! "~ —
Nursing homes
100* Employees
Tax-paying U-™ «.13X
Tax-exempt 23.79X 32.41X
340.59X 465.48X 345.83X 470.72X
157.36X 215.06X 159.78X 217.48X
Commercial research labs
74.70X 102.09X 75.85X 103.24X
100* Enployees H-30X 13.81X 9.60X 12.11X
Tax-exe^t 18.66X 24.37X
N/A N/A
Commercial incineration fac.
Table 14 indicates which type of HWI -• batch, continuous, or pathological -- is applicable.
N/* Not available.
Add-25
-------
6.0 SUBSTITUTION
In the Analysis of Economic Impacts for New Sources, it
was seen that there is a cost-saving alternative (either
offsite contract disposal or onsite autoclaving) to onsite
incineration for two model MWIs in the baseline and under
Control Option 2, five model MWIs under Control Option 3,
and all six model MWIs (excluding the Continuous 36,000,
which by definition, as a commercial MWI, is an alternative
to onsite incineration) under Control Option 4.
Let's look at this in another way. Nationwide, total
new onsite capacity from 1991 to 1995 as represented by
these six model MWIs is 164,305 tons per year. Of this, the
Intermittent 21,000 accounts for 14.3 percent, the
Continuous 24,000 for 35.7 percent, the Intermittent 8,400
for 27.2 percent, the Pathological 2,000 for 0.5 percent,
the Intermittent 2,000 for 19.6 percent, and the Batch 250
for 2.7 percent. Meanwhile, the Intermittent 21,000 has a
cheaper alternative beginning under Control Option 3, the
Continuous 24,000 beginning in the baseline, the
Intermittent 8,400 beginning under Control Option 3, the
Pathological 2,000 beginning under Control Option 4, the
Intermittent 2,000 beginning under Control Option 3, and the
Batch 250 beginning in the baseline. Therefore, based only
on estimated average costs (other factors would also have to
be considered), 38.4 percent of nationwide new (from 1991 to
1995) onsite MWI capacity would substitute in the baseline
and under Control Option 2, 99.5 percent would substitute
under Control Option 3, and 100 percent would substitute
under Control Option 4.
Table 20C confirms that there is a cheaper alternative
to onsite incineration for all six model MWIs under Control
Option 4. Table 20D shows that the same is true under
Control Option 5. In fact, the cost advantage of one or the
other alternative over onsite incineration is greater for
all six model MWIs under Control Option 5, indicating that
Add-26
-------
TABLE 20C. COMPARATIVE ANNUAL PER-TON COSTS
OF ONSITE MEDICAL WASTE INCINERATION
AND ALTERNATIVE TREATMENT METHODS: BASELINE AND
CONTROL OPTION 4
—NEW MWIs—
Baseline
Control Option 4
Qu
CX
I
PO
Model MWI
Onsite Offsite Onsite Onsite Offsite Onsite
Capacity incin- contract auto- incin- contract auto-
(tons/yr) eration disposal claving eration disposal' claving
Inter.
Cont.
Inter.
Path.
Inter.
Batch
21,000
24,000
8,400
2,000
2,000
250
1,176
977
470
172
115
27
$ 101
173
177
333
457
1,244
$600
600
600
600
600
600
$ 134
160
228
N.A.
570
2,080
$ 312
381
525
1,007
1,510
5,504
$632-749
632-749
632-749
632-749
632-749
632-749
$ 134
160
228
N.A.
570
2,080
•The low end of the range is based on no control costs for existing MWIs, while the
high end is based on the same control stringency for existing MWIs under the
Emission Guidelines as for new MWIs under the NSPS. The methodology recognizes
that the cost of offsite incineration will be influenced by both the NSPS and the
Emission Guidelines.
N.A. Not applicable.
Abbreviations: Cont. = Continuous, Inter. = Intermittent, Path.
Pathological.
-------
CL
QL
I
OT
TABLE 20D. COMPARATIVE ANNUAL PER-TON COSTS
OF ONSITE MEDICAL WASTE INCINERATION
AND ALTERNATIVE TREATMENT METHODS: BASELINE AND
CONTROL OPTION 5
—NEW MWIs—
Model
Inter.
Cont .
Inter.
Path.
Inter.
Batch
MWI
21,000
24,000
8,400
2,000
2,000
250
Capacity
(tons/yr)
1,176
977
470
172
115
27
Onsite
incin-
eration
$ 101
173
177
333
457
1,244
Baseline
Offsite
contract
disposal
$600
600
600
500
600
600
Control Option 5
Onsite
auto-
claving
$ 134
160
228
N.A.
570
2,080
Onsite
incin-
eration
$ 442
519
848
1,895
2,834
11,159
Offsite
contract
disposal*
$652-859
652-859
652-859
652-859
652-859
652-859
Onsite
auto-
claving
$ 134
160
228
N.A.
570
2,080
'The low end of the range is based on no control costs for existing MWIs, while the
high end is based on the same control stringency for existing MWIs under the
Emission Guidelines as for new MWIs under the NSPS. The methodology recognizes
that the cost of offsite incineration will be influenced by both the NSPS and the
Emission Guidelines.
N.A. Not applicable.
Abbreviations: Cont. = Continuous, Inter. = Intermittent, Path. = Pathological.
-------
substitution is even more likely to occur than under Control
Option 4. Based solely on estimated average costs, 100
percent of nationwide new (from 1991 to 1995) onsite MWI
capacity would substitute under Control Option 5, as under
Control Option 4.
The offsite contract disposal cost under Control Option
5, $652-859/ton, reflects an increase of $52-259/ton over
the estimated baseline of $600/ton. This is calculated as a
weighted (by commercial incineration capacity) average of
$167/ton for the average incremental cost impact of the NSPS
on the commercial incineration capacity of new sources (see
Section 4.1) and $300/ton for the average incremental cost
impact of the Emission Guidelines on the commercial
incineration capacity of existing sources (see Section 4.1
of the Addendum to the Analysis of Economic Impacts for
Existing Sources). The low end of the range is based on the
baseline (no additional controls) for existing sources,
while the high end is based on the same control stringency
for existing sources under the Emission Guidelines as for
new sources under the NSPS.
6.1 PER-FACILITY IMPACTS OF SUBSTITUTION
In addition to being cost-saving in some cases,
substitution will also be necessary in order to stay in
business if control costs are prohibitive. The Analysis of
Economic Impacts for New Sources identified the following
cases under Control Option 4 in which substitution may be
necessary because annualized control costs may not be
recoverable with a price increase, and the resulting impact
on earnings may not be sustainable and/or capital to finance
the up-front investment may not be available:
1) Hospitals with fewer than 50 beds
2) Hospitals with 50-99 beds
3) Several subcategories of hospitals with 100+ beds
4) Nursing homes with 100+ beds
Add-29
-------
5) Veterinary facilities with 10-19 employees
6) Veterinary facilities with 20+ employees
7) Tax-paying commercial research labs with 20-99
employees
8) Tax-exempt commercial research labs
In Sections 5.2 through 5.4 it was seen that these same
cases apply under Control Option 5.
The question is: Is substitution economically feasible
in these cases? Table 22 presents the incremental annual
costs of substitution. The price increase necessary to
recover incremental substitution costs is calculated in
Table 23, and the impact on net income if no price increase
is achieved is calculated in Table 24.
In Table 23, the cases under Control Option 5 in which
it may not be possible to recover substitution costs with a
price increase are the same as under Control Option 4,
(veterinary facilities with 10-19 employees switching from
the Intermittent 2,000 to onsite autoclaving and from the
Pathological 2,000 to offsite contract disposal, veterinary
facilities with 20+ employees switching from the
Pathological 2,000 to offsite contract disposal, and tax-
paying commercial research labs with 20-99 employees
switching from the Pathological 2,000 to offsite contract
disposal).
Table 24 shows, in turn, that net income would decline
significantly — i.e., by 10 percent or more — in the absence
of a price increase in the same cases under Control Option 5
as under Control Option 4 (and under Control Option 3, as
well): veterinary facilities with 10-19 employees switching
from the Pathological 2,000 to offsite contract disposal and
tax-paying commercial research labs with 20-99 employees
switching from the Pathological 2,000 to offsite contract
disposal. In addition, there is one new case under Control
Add-30
-------
TABLE 22. INPUTS FOR PER-FACILITY SUBSTITUTION ANALYSIS
••NEW KUls--
Net
Incremental annual cost of twitching to:
Onsite Offsite contract disposal
Industry/Model KUI
Revenue a auto
(S nil.) Income claving Baseline C.0.4 C.0.5
Hospitals
<50 Beds
Batch 250
50-99 Beds
Inter. 2.000
Path. 2,000
100-299 Beds
T.B. i other resp. diseases
Inter 8,400
Non-AHA-registered, other
Inter 8..400
Nursing homes
100* Employees
Tax-paying
Inter 8,400
Inter. 2,000
Tax-exempt
Inter 8,400
Inter. 2,000
Veterinary facilities
10-19 Employees
Inter. 2,000
Path. 2,00:
20* Employees
Inter. 2,000
Path. 2,000
Commercial research labs
Tax-paying
20-99 Employees
Inter. 2,000
Path. 2,COO
Tax-exempt
Inter. 8,400
4.C $43.250
9.1 1189,981
9.7 $340,933
12.1 (416,819
22,572 (17.388) (13,365) (10,395)
12,995 16,445 33,580 46,230
N.A. 45,924 71,552 90,472
23,970 198,810 268,840 320,540
23,970 198,810 268,840 320,540
3.5 $139,944
4.9 $136,410
0.9 $349,750
2.0 $757,011
23,970
12,995
23,970
12,99?
12,995
N.A.
12,995
N.A.
198,810
16,445
198,810
16,445
16,445
45,924
16,445
45,924
268,840
33,580
268,840
33,580
33,580
71,552
33.580
71,552
320,540
46,230
320,540
46,230
46,230
90,472
46,230
9C.472
2.8 $165,018
13.5 $564,900
12.995 16,445 33,580 46,230
N.A. 45,924 71,552 90,472
23.970
198,810 268,840 320,540
After-tax net income for hospitalsCtwcause before-tax net
before-tax net income for all else.
N.A. Not applicable.
Abbreviations: Inter."Intermittent, Path.'Pathological.
income is not available in all cases),
Add-31
-------
TABLE 23. PER-FACUITY ANNUALIZED SUBSTITUTION COSTS AS A PERCENT OF REVENUE
(ONLY FOR CASES IN WHICH SUBSTITUTION IS NECESSARY)
--NEW MUU--
Industry/ModeI MUI
Control Option 4
Control Option 5
Onsite Offsite
•uto- contract
elaving disposal
Onsite Offsite
•uto- contract
claving disposal
Hospitals
«50 Beds
Batch 250
50-99 Beds
Inter. 2,000
Path. 2,000
100-299 Beds
T.B. I other resp. diseases
Inter 8,400
Non-AHA- registered, other
Inter 8,400
Nursing homes
100* Employees
Tax-paying
Inter 8,400
Inter. 2,000
Tax-exempt
Inter 8,400
Inter. 2,000
Veterinary facilities
10-19 Employees
Inter. 2,000
Path. 2,000
20* Employees
Inter. 2,000
Path. 2,000
Commercial research labs
Tax-paying
20-99 Employees
Inter. 2,000
Path. 2,000
Tax-exempt
Inter. 8,400
0.56X
0.14X
N.A.
0.25X
0.20X
0.68X
0.37X
0.49X
0.27X
1.4U
N.A.
0.65X
N.A.
0.46X
N.A,
0.18X
-0.33X
0.37X
0.79X
2.77X
2.22X
7.68X
0.96X
5.49X
0.69X
3.73X
7.95X
1.68X
3.582
1.20X
2.56X
1.99X
0.56X
0.14X
N.A.
0.25X
0.20X
0.68X
0.37X
0.49X
0.2TX
1.44X
N.A.
0.65X
N.A.
0.46X
N.A.
0.18X
-0.26X
0.51X
0.99X
3.30X
2.65X
9.16X
1.32X
6.54X
0.94X
5.14X
10.05X
2.31X
4.S2X
1.65X
3.23X
2.37X
N.A. Not applicable.
Abbreviations: Inter.'Intermittent, Path."Pathological.
Add-32
-------
TABLE 24. PER-FACILITY ANNUALIZED SUBSTITUTION COSTS AS A PERCENT OF NET INCOME
(OWLY FOR CASES IN WHICH SUBSTITUTION IS NECESSARY)
—NEW MWIs—
.««««««««««"««*=«"«««««=«««««»"""""•*"*""""""*
czcziErzzzxxzzzszzzz
Industry/Model MUI
Control Option
Control Option 5
Onsite Offsite Onsite Offsite
•uto- contract auto- contract
elaving disposal elaving disposal
Hospitals
<50 Beds
Batch 250
50-99 Beds
Inter. 2,000
Path. 2,000
100-299 Beds
T.B. I other resp. diseases
Inter 8,400
Non-AKA-resistered, other
Inter 8,400
Nursing homes
100+ Employees
Tax-paying
Inter 8.40D
Inter. 2,000
Tax-exempt
Inter 8,400
Inter. 2,000
Veterinary facilities
10-19 Employees
Inter. 2,000
Path. 2,000
20+ Employees
Inter. 2,000
Path. 2,000
Commercial research labs
Tax-paying
20-99 Employees
Inter. 2,000
Path. 2,000
Tax-exempt
Inter. 8,400
27.11X -16.05X
6.84X 17.68%
N.A. 37.66X
7.03X 7B.85X
5.75X 64.SOX
17.13X 192.11X
9.29X 24.00X
17.57% 197.08X
9.53% 24.62X
3.72X 9.60X
N.A. 20.46X
1.72X
N.A.
4.44X
9.45X
7.73X 19.99X
N.A. 42.S9X
4.24X 47.59X
27.11X -12.49X
6.84X 24.33X
N.A. 47.62X
7.03X 94.02X
5.75X 76.90X
17.13X 229.05X
9.29X 33.03X
17.57X 234.98X
9.53X 33.89X
3.72X 13.22X
N.A. 25.B7X
1.72X 6.11X
N.A. 11.95X
7.73X 27.5U
N.A. . S3.85X
4.24X 56.74X
ZZZZZBZZXZZZZZXZ
After-tax net income for hospitalstbecause before-tax net income is
in all cases), before-tax net income for all else.
N.A. Not applicable.
Abbreviations: Inter -Intermittent, Path,"Pathological.
not available
Add-33
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Option 5 in which net income would decline by more than 10
percent if no price increase is achieved: veterinary
facilities with 20+ employees switching from the
Pathological 2,000 to offsite contract disposal. Like the
cases common to Control Options 3, 4, and 5, this case
involves the Pathological 2,000, representative of
"pathological waste generators" (i.e., facilities that
generate a substantial proportion and/or quantity of
pathological waste). As under Control Options 3 and 4, the
significant substitution impacts under Control Option 5 do
not in general imply closure. In general, it should be
possible to absorb substitution costs without compromising
competitive position. This is consistent with the fact that
in both of the affected industries, the great majority of
facilities already utilize an alternative to onsite
incineration (97.4% of all veterinary facilities, a minimum
of 86.9% of all commercial research labs). However, as
under Control Option 4, there may be a few facilities that,
as exceptions, would not be able to absorb substitution
costs (and therefore would have to close). The exceptions
will require the particular conditions in individual market
segments as explained in Section 3.5.5 of the Analysis of
Economic Impacts for New Sources. The number of exceptions
is sure to be higher under Control Option 5 than under the
less-stringent Control Option 4.
6.2 INDUSTRY-WIDE IMPACTS OF SUBSTITUTION
It remains to follow up on the findings in Sections
4.3.1 and 4.3.2 that the impacts under Control Option 5 on
industry-wide output and employment for veterinary
facilities and commercial research labs could be considered
significant. Substitution would avoid significant impacts.
The industry-wide annual cost under Control Option 5 for
veterinary facilities to switch from one Pathological 2,000
to offsite contract disposal (based on $859/ton, the high
end of the cost range for offsite contract disposal) and
Add-34
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from five Intermittent 2,000s to onsite autoclaving would be
$155,457. In addition, the industry-wide annual cost to
substitute for all existing MWIs would be $47.2 million (see
Section 6.2 of the Addendum to the Analysis of Economic
Impacts for Existing Sources). The total substitution cost
is therefore $47.4 million. In comparison, net industry-
wide annualized control costs under Control Option 5 are
$141.5 million (see Table 8B). The market price increase to
recover substitution costs is only 0.64 percent, compared to
1.907 percent for controls. The impacts of substitution
costs on industry-wide output and employment are, in turn,
also not significant (less than a 1% decline).
Substitution also renders insignificant the industry-
wide impacts on commercial research labs under Control
Option 5. The industry-wide annual cost under Control
Option 5 of switching from two Intermittent 21,000s to
onsite autoclaving, from four Continuous 24,000s to onsite
autoclaving, from eight Intermittent 8,400s to onsite
autoclaving, from one Pathological 2,000 to offsite contract
disposal (based on $S59/ton, the high end of the cost range
for offsite contract disposal), and from 21 Intermittent
2,000s to onsite autoclaving would be $581,939. In
addition, the industry-wide annual cost to substitute for
all existing MWIs would be $24.9 million (see Section 6.2 of
the Addendum to the Analysis of Economic Impacts for
Existing Sources)- The total substitution cost is therefore
$25.5 million. This compares to $148.0 million for net
industry-wide annualized control costs. The market price
increase to recover substitution costs is only 0.22 percent,
compared to 1.25 percent for controls. As a result,
industry-wide output and employment impacts are not
significant (less than a 1% decline).
7.0 PER-FACILITY IMPACTS FOR OFFSITE GENERATORS
Incremental annual costs for offsite generators in
industry categories and subcategories defined to consist
Add-35
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exclusively of offsite generators are presented in Table 25.
As explained in Section 6.0, the incremental annual cost per
ton under Control Option 5, based on Control Option 5 of the
Emission Guidelines for existing sources, is $259.
The facility price increase is calculated in Table 26.
All facility price increases are less than one percent and
none deviate significantly from the market price increase.
Therefore, all facility price increases are considered
achievable. Since they are achievable, the impact of full-
cost absorption, measured in Table 27, will not come to
pass.
8.0 IMPACTS ON TAXPAYERS
Per-capita impacts of annual control costs to public
facilities are shown in Table 28. For the average-sized
township (population 3,119) with jurisdiction over a
hospital (or any other type of medical waste generator)
operating an Intermittent 8,400, the per-capita annual
control cost rises from $52.28 under Control Option 4 to
$101.16 under Control Option 5. However, these per-capita
impacts can be greatly reduced by switching to onsite
autoclaving. In addition, it is not clear that an
Intermittent 8,400 would be under the jurisdiction of a
government unit with a population of only 3,119.
The per-capita impacts for fire and rescue operations
and correctional facilities continue to be less than 10
cents.
9.0 IMPACTS ON SMALL ENTITIES
Under Control Option 5, the NSPS will continue to not
have a "significant economic impact on a substantial number
of small entities."
Some "small" government jurisdictions may be
significantly impacted, but the number would not be close to
being "substantial" — i.e., 20 percent or more of all small
government jurisdictions impacted.
Add-36
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TABLE 25. ESTIHATED INCREMENTAL ANNUAL COSTS FOR FACILITIES THAT SEND
ALL OF THEIR MEDICAL WASTE OFFSITE TO BE INCINERATED
•-NEW MWIS--
Medical Estimated
waste Share share of Medical
generated of Industry waste per
annually industry medical No. of facility
(tons) employment waste(tons) facilities (tons)
Nursing homes
0-19 Employees
Tax-paying
Tax-exempt
20-99 Employees
Tax-paying
Tax-exempt
Physicians' offices
Dentists' offices t clinics
Offices
Clinics
Tax-paying
Tax-exewpt
Outpatient care (clinics;
Physicians' cl inicsCa.-nb. care)
Tax-paying
Tax-exempt
Freestanding kidney dial. fac.
Tax-paying
Tax-exempt
?rcestandinj blood banks
Veterinary facilities
0-9 employees
Laboratories
Commercial research
Tax-paying
0-19 Employees
Other
Medical
Dental
Funeral homes
Fire t rescue
Corrections
.. Federal govt.
State govt.
Local govt.
198,000
1.09X
0.61X
32.42X
7.32X
235,000 100. OOX
58,000
98.88X
0.94X
0.18X
175,000
49.77X
41.92X
6.48X
1.84X
33,000 100. OOX
31,000
51.13X
55.500
9.29X
117,500
69.21X
30.79X
6,000 100. OOX
11,000 100. OOX
22,000
3.06X
62.17X
34.76X
2,158
1,208
64,192
14,494
235,000
57,350
545
104
87,098
73,360
11,340
3,220
33,000
15,850
5,156
81,322
36,178
6,000
11,000
673
13,677
7,647
2,099
1,017
7,673
1,677
191,278
103,665
486
62
4,224
2,295
711
128
218
18,317
2,777
6,871
7,970
22,000
29,840
47
9C3
1.03
1.19
8.37
8.64
1.23
0.55
1.12
1.68
20. f..'
31.97
15.95
25.16
151.38
0.87
1.86
11.84
4.54
0.27
0.37
14.32
15.15
Incremental annual cost
a
per facility
C.0.4
$153
$177
$1,247
$1,288
$183
$82
$167
$251
$3,072
$4,763
$2,376
$3.748
$22,555
$129
$277
$1,763
$676
$41
$55
$2,134
$2,257
C.0.5
$266
$308
$2,167
$2,238
$318
$143
$291
$436
$5,340
$8,279
$4,131
$6,515
$39,206
$224
$481
$3,065
$1,176
$71
$95
$3,710
$3,923
3,338 2.29 $341 $553
UZZZZZZZC£-2ZSCZZZBBZ»ZZSSZZZZSSXZZCZ«ZZEZ«ZZ»»!
Based on $149/ton under Control Option 4, $259/ton under Control Option 5. These are maximum costs
because It is assumed that the Emission Guidelines for existing sources are as stringent as the
NSPS for new sources.
Add-37
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TABLE 26. PER-FACILITY ANNUALIZED CONTROL COSTS AS A PERCENT OF
REVENUE/BUDGET : OFFSITE GENERATORS
••NEW MUIC--
Industry C.0.4 C.0.5
Nursing homes
0-19 Employees
Tax-paying 0.081X O.UOX
Tax-exempt 0.074X 0.129X
20-99 Employees
Tax-paying 0.099X 0.172X
Tax-exempt 0.099X 0.172X
Physicians' offices 0.037X 0.064X
Dentists' offices 1 clinics
Offices 0.032X 0.055X
Clinics
Tax-paying 0.031X 0.054X
Tax-exempt 0.016X 0.02BX
Outpatient care (clinics)
Physicians' clinics(amb. care)
Tax-paying 0.172X 0.298X
Tax-exetrpt 0.174X 0.303X
Freestanding kidney dial. fac.
Tax-paying 0.180X 0.313X
Tax-exenpt 0.210X 0.36SX
Freestanding blood banks 0.397X 0.690X
Veterinary facilities
0-9 employee? 0.060X 0.105X
Laboratories
Corrnercial research
Tax-payins
0-19 Enptoyees 0.077X 0.134X
Other
Medical 0.205X 0.356X
Dental 0.313X O.SUX
FineraI homes 0.009% 0.016X
Fire t rescue 0.013X 0.023X
Corrections
Federal gov<. O.OCSX O.OHX
State govt, 0.013X 0.023X
local govt. 0.015X 0.026X
Add-38
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TABLE 27. PER-FACILITY ANNUALIZED CONTROL COSTS AS A PERCENT OF
BEFORE-TAX NET INCOME : OFFSJTE GENERATORS
--NEW HWIs--
•»••««»«««•«•,«••«««••««•«»*««»»••«•«»»««••«»«««*••"*••••"••*••*•*
Industry
C.0.4 C.0.5
N/A Not available.
Nursing homes
0-19 Employees
Tax-paying 2.019X 3.510X
Tax-exenpt 2.658X 4.620X
20-99 Employees
Tax-paying 2.473X 4.299X
Tax-exenpt 3.530X 6.137X
Physicians' offices 0.081X O.UOX
Dentists' offices I clinics
Offices 0.092X 0.161X
Clinics
Tax-paying 0.097X 0.169X
Tax-exeupt N/A N/A
Outpatient care (clinics)
Physicians' clinicsCanfc. care)
Tax-paying 4.291X 7.459X
Tax-exeffpt *-216X 10.805X
Freestanding kidney dial. fac.
Tax-paying 1-683X 2.926X
Tax-exetrpt 2.799X 4.866X
Freestanding blood banks N/A N/A
Veterinary facilities
0-9 enployees 0.15n 0.273X
Laboratories
Connercial research
Tax-paying
0-19 Enployees 1.289X 2.241X
Other
Medical 2.312X 4.018X
Dental 3.479* 6.048X
Funeral homes 0.079X 0.137X
Fire t rescue N/A N/A
Corrections
Federal govt, N/A N/A
State govt. N/A N/A
Local govt. N/A N/A
Add-39
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TABLE 28. PER-CAPITA IMPACTS Of ANNUAL COSTS TO PUBLIC FACILITIES
—New NUIs-
Annual cost per facility
(intermittent NUI for hospitals; No. of
Number all else offsite contract disposal) govt.
government unit Facilities C.0.4 C.0.5
Hospitals
Federal n/A (a) $163.047 $315.518
State N/A (b) $247.958 $400,429
local N/A (c) $163.047 $315.518
County
Municipal
Township
Special district
Fire and rescue 29,840 (d) $55 $95
County
Municipal
Township
Special district
Corrections
Federal 47 $2,134 $3,710
State 903 $2.257 $3.923
Local 3,338 $341 $593
County
Municipal
1986
1
50
3.042
19.200
16,691
783
3,042
19,200
16.691
5,070
1
50
3,042
19,200
Average
population
per govt.
unit, 1986
241.625,000
4.832,500
71,465
7,805
3,119
N/A
71,465
7,805
3,119
N/A
241.625,000
4,832.500
71,465
7,805
Par-capita cost of
per-facility annual cost
C.0.4
$0.00
$0.05
82.28
$20.89
$52.28
N/A
$0.00
$0.01
$0.02
N/A
$0.00
$0.00
$0.00
C.0.5
80.00
$0.08
84.42
$40.43
$101.16
N/A
$0.00
$0.01
$0.03
N/A
$0.00
$0.00
$0.01
$0.04 $0.08
(a) The total number of Federal hospitals equals 340 (Table 4A). However, the nurfcer with and the number without an MVI
is not known.
-------
Some "small" medical waste generators wou^d be
significantly impacted by controls. Under Control Option 4,
production costs at commercial incineration facilities and
at MWI-operating veterinary facilities with 10-19 and 20+
employees would increase on average by more than five
percent (a "significant" impact). Production costs would
increase on average by more than five percent in these same
cases under Control Option 5, as well as in the cases of
MWI-operating hospitals with less than 50 beds, nursing
homes with 100+ employees, and tax-paying commercial
research labs with 20-99 beds.
However, commercial incineration facilities are
expected to recover their cost increases with price
increases. And, with the exception of veterinary facilities
with 10-19 employees operating the Pathological 2,000,
significant impacts can be avoided by substituting. The
incremental cost of substituting is less than five percent
for all but veterinary facilities with 10-19 employees
operating the Pathological 2,000, for which the cost of
switching to offsite contract disposal exceeds five percent
under both Control Option 4 and Control Option 5. However,
only one veterinary facility is projected to invest in a
Pathological 2,000 from 1991 to 1995. Even when considering
the industry's posited 493 existing Pathological 2,000s, for
which substitution costs as a result of the Emission
Guidelines are significant, the number of facilities that
are significantly impacted will not be "substantial," i.e.,
20 percent or more of all small entities impacted. This is
because there are 21,496 facilities in the industry, the
vast majority of which are "small."
In Section 6.1 it was seen that a few pathological
waste generators nay have to close as a result of the NSPS,
even more so under Control Option 5 than under Control
Option 4. These cases are exceptions, however, and the
number will not come close to being "substantial."
Add-41
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TECHNICAL REPORT DATA
(Please read Instructions on reverse before completing)
1. REPORT NO.
EPA-453/R-94-047a
2.
4. TITLE AND SUBTITLE
Medical Waste Incinerators - Background Information for
Proposed Standards and Guidelines: Analysis of Economic
Impacts for New Sources
7. AUTHOR(S)
9. PERFORMING ORGANIZATION NAME AND ADDRESS
Emission Standards Division (Mail Drop 13)
Office of Air Quality Planning and Standards
U.S. Environmental Protection Agency
Research Triangle Park, NC 27711
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 1994
6. PERFORMING ORGANIZATION CODE
S. PERFORMING ORGANIZATION REPORT NO.
10. PROGRAM ELEMENT NO.
11. CONTRACT/GRANT NO.
68-D1-0143
13. TYPE OF REPORT AND PERIOD COVERED
Final
14. SPONSORING AGENCY CODE
EPA/200/04
15. SUPPLEMENTARY NOTES
Published in conjunction with proposed air emission standards and guidelines for
medical waste incinerators
16. ABSTRACT
The economic impact analysis uses annualized control costs in conjunction with economic and
financial parameters to estimate the potential economic impacts that may be experienced by new facilities
in industries that generate medical waste. Economic impacts such as price, output, and employment
changes are examined for industries such as hospitals, nursing homes, and veterinary facilities. This is
one in a series of reports used as background information in developing air emission standards and
guidelines for new and existing MWI's.
17.
». DESCRIPTORS
KEY WORDS AND DOCUMENT ANALYSIS
b. IDENTIFIERS/OPEN ENDED TERMS c. COSATI Field/Group
Air Pollution Air Pollution Control
Pollution Control Solid Waste
Standards of Performance Medical Waste
Emission Guidelines Incineration
Medical Waste Incinerators
18. DISTRIBUTION STATEMENT
Release Unlimited
19. SECURITY CLASS (Report, 21. NO. OF PAGES
Unclassified 181
20. SECURITY CLASS (Page) 22. PRICE
Unclassified
EPA Form 2220-1 (Rev. 4-77) PREVIOUS EDITION IS OBSOLETE
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