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Raadabadi M, Ahmadi Tehrani G, Nikomanesh P. Economic evaluation of hospital waste sterilization using outsourcing and government-managed methods in selected hospitals in Yazd. jha 2025; 28 (3) :1-12
URL: http://jha.iums.ac.ir/article-1-4677-en.html
URL: http://jha.iums.ac.ir/article-1-4677-en.html
1- Health Policy and Management Research Centre, Health Management and Policy Research Center, Department of Health Management and Economics, School of Public Health, Shahid Sadoughi University of Medical Sciences, Yazd, Iran. , mehdiraadabadi@gmail.com
2- Department of Health Management and Economics, School of Public Health, Shahid Sadoughi University of Medical Sciences, Yazd, Iran.
3- Department of Health Management and Economics, School of Public Health, Shahid Sadoughi University of Medical Sciences, Yazd, Iran. & Student Research Committee, Shahid Sadoughi University of Medical Sciences, Yazd, Iran.
2- Department of Health Management and Economics, School of Public Health, Shahid Sadoughi University of Medical Sciences, Yazd, Iran.
3- Department of Health Management and Economics, School of Public Health, Shahid Sadoughi University of Medical Sciences, Yazd, Iran. & Student Research Committee, Shahid Sadoughi University of Medical Sciences, Yazd, Iran.
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Table 1. Specifications of hospitals regarding waste treatment
Table 2. Waste generation in the studied hospitals
Table 3. Personnel, consumables, maintenance, and capital costs in in-house hospitals
Table 4. Comparison of total costs and ACER across hospitals
Table 5. Sensitivity analysis of hospital waste treatment costs
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Introduction
One of the ongoing challenges in public health and environmental protection is managing waste generated by human activities. Hospital waste, in particular, is concerning due to its toxic and infectious components [1]. Beyond health and environmental implications, it imposes a significant economic burden on healthcare systems [2]. This burden extends beyond direct operational costs, as improper management can lead to hospital-acquired infections, environmental contamination, and legal penalties, resulting in substantial additional costs. Consequently, selecting an optimal waste management strategy, both technically efficient and economically viable, is a critical priority for hospital administrators.
Two main approaches are commonly employed: in-house waste treatment carried out directly by hospitals (the public or governmental model), and outsourcing to specialized private contractors. Each strategy has distinct economic advantages and disadvantages, highlighting the need for systematic and comprehensive comparative assessments [3]. The lack of robust cost-effectiveness evaluations comparing in-house and outsourced waste management approaches presents a notable research gap that complicates evidence-based decision-making for policymakers. Therefore, conducting economic evaluations in this field, particularly within the Iranian healthcare system, is essential to identify the most cost-effective and sustainable option [4].
In Yazd, hospitals adopt varying strategies for medical waste treatment. While some rely on outsourcing to private waste management companies, others manage the process internally under hospital supervision. This variation has created uncertainty regarding the most cost-effective approach, complicating decision-making. Given the health, environmental and financial consequences of medical waste management, applying scientific cost analysis methods is essential. Accordingly, the present economic evaluation was conducted to compare outsourcing versus in-house (governmental) models of hospital waste treatment in selected Yazd hospitals, aiming to identify the more cost-effective strategy.
Methods
This study employed a partial economic evaluation via cost analysis to identify, quantify, and compare the costs of hospital waste treatment under two approaches, outsourcing and in-house (governmental) management, in selected Yazd hospitals in 2023. All costs were assessed from the provider perspective (hospital).
For comparative assessment, four public hospitals in Yazd were purposively selected: two hospitals (A and B) outsourced their waste treatment services, while the other two (C and D) managed it in-house. Included hospitals were medium to large in terms of bed capacity. The inclusion criteria were: 1) active waste management unit with continuous use of waste treatment devices for ≥ 2 years; 2) availability of complete financial and cost data related to the waste treatment process; 3) managerial approval for data sharing. Hospitals with incomplete financial records, major device interruptions, or refusing data access were excluded. Hospital selection was based on management type (outsourced/in-house) and relative similarity in service level and bed capacity to ensure comparability.
Data were collected through interviews with hospital experts and review of financial and administrative records for the previous year. Separate cost estimates were calculated for two types of hospitals.
A researcher-designed data collection form was used to collect information such as hospital name, management type, unit size, staff numbers, daily and monthly waste volume, use of non-combustible waste bags, device specifications (brand, capacity, purchase cost), personnel costs, protective equipment, accommodation and hygiene expenses, repair and maintenance costs, consumables (e.g., bags, test kits), and outsourcing contract values.
All costs related to hospital waste treatment under both approaches were identified, valued, and measured. These included consumable costs (materials, tests, and protective equipment), personnel costs, maintenance costs, and capital costs (waste treatment devices). Annual total costs were calculated for each hospital, along with cost per kilogram of treated waste and cost per active beds. For economic comparison, the average cost-effectiveness ratio (ACER) was used, based on costs and outcomes (waste volume treated and number of active beds). Statistical differences between outsourcing and in-house models were examined using the Mann–Whitney U test (p < 0.05).
Capital costs included only device acquisition. Initial purchase prices were adjusted to account for a 10-year useful life, using future value (FV) calculations with an assumed annual inflation rate of 30% in the base scenario: FV=PV × (1+i)n where FV = future value, PV = initial purchases cost, i = annual inflation rate (30%), and n is the expected device life (10 years). Equivalent annualized costs were then incorporated into the total cost estimates.
To assess robustness and uncertainty, a two-stage sensitivity analysis was conducted: 1) One-way sensitivity analysis with ±10% variation in total costs (consumables, capital, and maintenance); 2) Inflation rate sensitivity analysis, varying between 20–40% to assess its impact on capital costs. All modeling, economic evaluation, statistical tests, and sensitivity analyses were performed in Microsoft Excel 2016.
Results
The costs of hospital waste treatment were calculated and compared across four selected hospitals, two applying the outsourcing model and two using the in-house (governmental) model. Device specifications and staffing details for the waste treatment units are presented in Table 1.
One of the ongoing challenges in public health and environmental protection is managing waste generated by human activities. Hospital waste, in particular, is concerning due to its toxic and infectious components [1]. Beyond health and environmental implications, it imposes a significant economic burden on healthcare systems [2]. This burden extends beyond direct operational costs, as improper management can lead to hospital-acquired infections, environmental contamination, and legal penalties, resulting in substantial additional costs. Consequently, selecting an optimal waste management strategy, both technically efficient and economically viable, is a critical priority for hospital administrators.
Two main approaches are commonly employed: in-house waste treatment carried out directly by hospitals (the public or governmental model), and outsourcing to specialized private contractors. Each strategy has distinct economic advantages and disadvantages, highlighting the need for systematic and comprehensive comparative assessments [3]. The lack of robust cost-effectiveness evaluations comparing in-house and outsourced waste management approaches presents a notable research gap that complicates evidence-based decision-making for policymakers. Therefore, conducting economic evaluations in this field, particularly within the Iranian healthcare system, is essential to identify the most cost-effective and sustainable option [4].
In Yazd, hospitals adopt varying strategies for medical waste treatment. While some rely on outsourcing to private waste management companies, others manage the process internally under hospital supervision. This variation has created uncertainty regarding the most cost-effective approach, complicating decision-making. Given the health, environmental and financial consequences of medical waste management, applying scientific cost analysis methods is essential. Accordingly, the present economic evaluation was conducted to compare outsourcing versus in-house (governmental) models of hospital waste treatment in selected Yazd hospitals, aiming to identify the more cost-effective strategy.
Methods
This study employed a partial economic evaluation via cost analysis to identify, quantify, and compare the costs of hospital waste treatment under two approaches, outsourcing and in-house (governmental) management, in selected Yazd hospitals in 2023. All costs were assessed from the provider perspective (hospital).
For comparative assessment, four public hospitals in Yazd were purposively selected: two hospitals (A and B) outsourced their waste treatment services, while the other two (C and D) managed it in-house. Included hospitals were medium to large in terms of bed capacity. The inclusion criteria were: 1) active waste management unit with continuous use of waste treatment devices for ≥ 2 years; 2) availability of complete financial and cost data related to the waste treatment process; 3) managerial approval for data sharing. Hospitals with incomplete financial records, major device interruptions, or refusing data access were excluded. Hospital selection was based on management type (outsourced/in-house) and relative similarity in service level and bed capacity to ensure comparability.
Data were collected through interviews with hospital experts and review of financial and administrative records for the previous year. Separate cost estimates were calculated for two types of hospitals.
A researcher-designed data collection form was used to collect information such as hospital name, management type, unit size, staff numbers, daily and monthly waste volume, use of non-combustible waste bags, device specifications (brand, capacity, purchase cost), personnel costs, protective equipment, accommodation and hygiene expenses, repair and maintenance costs, consumables (e.g., bags, test kits), and outsourcing contract values.
All costs related to hospital waste treatment under both approaches were identified, valued, and measured. These included consumable costs (materials, tests, and protective equipment), personnel costs, maintenance costs, and capital costs (waste treatment devices). Annual total costs were calculated for each hospital, along with cost per kilogram of treated waste and cost per active beds. For economic comparison, the average cost-effectiveness ratio (ACER) was used, based on costs and outcomes (waste volume treated and number of active beds). Statistical differences between outsourcing and in-house models were examined using the Mann–Whitney U test (p < 0.05).
Capital costs included only device acquisition. Initial purchase prices were adjusted to account for a 10-year useful life, using future value (FV) calculations with an assumed annual inflation rate of 30% in the base scenario: FV=PV × (1+i)n where FV = future value, PV = initial purchases cost, i = annual inflation rate (30%), and n is the expected device life (10 years). Equivalent annualized costs were then incorporated into the total cost estimates.
To assess robustness and uncertainty, a two-stage sensitivity analysis was conducted: 1) One-way sensitivity analysis with ±10% variation in total costs (consumables, capital, and maintenance); 2) Inflation rate sensitivity analysis, varying between 20–40% to assess its impact on capital costs. All modeling, economic evaluation, statistical tests, and sensitivity analyses were performed in Microsoft Excel 2016.
Results
The costs of hospital waste treatment were calculated and compared across four selected hospitals, two applying the outsourcing model and two using the in-house (governmental) model. Device specifications and staffing details for the waste treatment units are presented in Table 1.
Table 1. Specifications of hospitals regarding waste treatment
| Hospital | Type of waste treatment | Device capacity (L) | Number of staff |
| A | Outsourced | 1000 | 2 |
| B | Outsourced | 1000 | 1 |
| C | In-house (governmental) | 1000 | 2 |
| D | In-house (governmental) | 300 | 1 |
Daily, monthly, and annual waste volumes are reported in Table 2. Hospital A generated the highest total volume (432,000 kg/year), while hospital D had the highest waste per active bed (917.2 kg/bed/year).
Table 2. Waste generation in the studied hospitals
| Hospital | Daily waste (kg) | Monthly waste (kg) | Annual waste (kg) | Waste per bed (kg/year) |
| A | 1,200 | 36,000 | 432,000 | 813.6 |
| B | 600 | 18,000 | 216,000 | 885.2 |
| C | 300 | 9,000 | 108,000 | 650.6 |
| D | 293 | 8,790 | 105,480 | 917.2 |
For in-house hospitals, waste treatment costs included consumables (e.g., Class VI and biological indicator tests, special non-combustible bags), annual personnel expenses, personal protective equipment (masks, gloves, protective clothing), maintenance and repair, and capital costs for treatment devices (annualized over 10 years, adjusted for inflation). Estimated total annual costs were 5,564,924,906 Iranian Rials (IRR) for hospital C and 4,556,454,197 IRR for hospital D. Energy, utilities, and accommodation costs were excluded as they were common to both models. Details are in Table 3.
Table 3. Personnel, consumables, maintenance, and capital costs in in-house hospitals
| Cost items (Iranian Rials) | Hospital C | Hospital D |
| Class VI & biological tests | 156,000,000 | 201,405,000 |
| Non-combustible bags | 486,400,000 | 0 |
| Personnel (annual) | 3,240,000,000 | 2,250,051,889 |
| Personal protective equipment | 6,000,000 | 50,960,000 |
| Maintenance | 85,850,000 | 158,377,000 |
| Capital (annualized) | 1,590,674,906 | 1,895,660,308 |
| Total | 5,564,924,906 | 4,556,454,197 |
Overall costs and cost-effectiveness ratios are summarized in Table 4. Hospital A had the highest annual cost in absolute terms, while hospital D had the highest costs per bed (~39.6 million IRR). For cost per kilogram of waste treated, hospital C was the most expensive (51,527 IRR/kg). The average cost-effectiveness ratio (ACER) indicated that outsourcing was, on average, 39% less costly per kilogram of waste and 32% cheaper per active bed compared to in-house treatment. Statistical tests (Mann–Whitney U) confirmed significant differences for both cost per bed (p = 0.041) and cost per kilogram (p = 0.038).
Table 4. Comparison of total costs and ACER across hospitals
| Hospital | Total annual cost (IRR) | Cost per bed (IRR) | Cost per kg waste (IRR) |
| A | 10,000,000,000 | 18,832,392 | 23,148 |
| B | 7,500,000,000 | 30,737,705 | 34,722 |
| C | 5,564,924,906 | 33,523,644 | 51,527 |
| D | 4,556,454,197 | 39,621,341 | 43,197 |
To assess the robustness of results, a two-stage sensitivity analysis was performed. First, a ±10% variation in total costs was applied. For outsourcing, the average annual cost (baseline 8,750,000,000 IRR) ranged between 7,875,000,000 and 9,625,000,000 IRR. For in-house management (baseline 5,060,689,551 IRR), costs ranged between 4,554,620,596 and 5,566,758,507 IRR. Outsourcing consistently remained the lower-cost option, though cost differences narrowed in higher-cost scenarios. Second, inflation rates for capital costs were varied from 20% to 40%. Increasing inflation from 30% (baseline) to 40% increased in-house annual costs by ~18%, while reducing it to 20% lowered costs by ~15%. These results indicate that in-house management is more sensitive to economic assumptions and inflation than outsourcing. Full sensitivity results are shown in Table 5.
Table 5. Sensitivity analysis of hospital waste treatment costs
| Waste treatment method | 90% scenario | Baseline | 110% scenario | Inflation 20% | Inflation 40% |
| Outsourcing | 7,875,000,000 | 8,750,000,000 | 9,625,000,000 | – | – |
| In-house (governmental) | 4,554,620,596 | 5,060,689,551 | 5,566,758,507 | ~4,301,000,000 | ~5,975,000,000 |
Discussion
This study found that hospital waste treatment through outsourcing was, on average, 39% less costly per kilogram of waste and 32% less costly per active bed compared to the in-house (government-managed) approach. Evidence from biomedical waste management in India has similarly shown that hospitals generating smaller volumes of waste face higher costs per bed/day, highlighting efficiency gains from centralized collection and treatment, often provided by outsourced companies [5]. Previous reports highlight that unit costs of waste management vary widely across countries and facilities, influenced by structural factors such as waste composition, segregation practices, transportation distance, and treatment/incineration technology. The cost reduction observed in outsourcing, particularly in facilities with higher waste volumes, is consistent with these findings of the present study. Moreover, these results align with research showing that improved segregation and economies of scale can substantially reduce the cost per kilogram of treated waste [6]. Domestic evidence also supports that outsourcing reduces operational expenditures and improves efficiency. A systematic review in Iranian hospitals confirms that outsourcing can reduce costs and enhance efficiency but its success critically depends on clear contracts, rigorous oversight, and effective risk management [7].
Limitations
Data were obtained from a limited number of hospitals within one region, which may limit the generalizability. Analysis relied on predefined assumptions regarding inflation rates and cost trends; thus, extreme fluctuations or external factors could influence the results. In addition, this study was limited to financial dimensions and did not assess non-financial outcomes such as service quality, environmental impact, or staff and patient satisfaction, which require further investigations.
Conclusion
Overall, outsourcing hospital waste management and treatment proved more cost-effective compared to the in-house approach, with potential to substantially reduce financial burden on healthcare organizations. ACER analysis demonstrated that outsourcing delivers higher efficiency at lower cost, and sensitivity analyses confirmed the robustness of this advantage under different cost and inflation scenarios. The success of outsourcing highly depends on proper implementation, transparent contracts, continuous monitoring, and stakeholder engagement. Future research should include non-financial outcomes such as service quality, environmental impacts, and social considerations, for a more comprehensive comparison of these approaches.
Declarations
Ethical Considerations: The study was approved by the Ethics Committee of the School of Public Health, Shahid Sadoughi University of Medical Sciences, with the ethics code IR.SSU.SPH.REC.1403.050.
Funding: This research was financially supported by Shahid Sadoughi University of Medical Sciences, Yazd, Iran. Funder had no roles in conducting the research, data collection, and analysis and paper preparation.
Conflicts of interests: None.
Authors’ contributions: M.R.: Conceptualization, study design, methodology, supervision, project administration, data analysis, writing–original draft, writing–review & editing, final approval; G.A.T.: Study design, data curation, validation, data analysis, writing–review & editing, final approval; P.N.: Data collection, data curation, validation, writing–review & editing, final approval. All authors have read and approved the final version of the manuscript
Consent for publication: None.
Data Availability: The datasets generated and/or analyzed during the current study are available from the corresponding author on reasonable request.
AI deceleration: None.
Acknowledgments: This article is derived from the research project (Code: 17511) entitled “Economic Evaluation of Hospital Waste Treatment through Outsourcing versus In-house Management in Selected Hospitals of Yazd, 2023”, conducted at Shahid Sadoughi University of Medical Sciences, Yazd, Iran. The authors would like to sincerely thank the managers and staff of the participating hospitals for their valuable cooperation in this study.
This study found that hospital waste treatment through outsourcing was, on average, 39% less costly per kilogram of waste and 32% less costly per active bed compared to the in-house (government-managed) approach. Evidence from biomedical waste management in India has similarly shown that hospitals generating smaller volumes of waste face higher costs per bed/day, highlighting efficiency gains from centralized collection and treatment, often provided by outsourced companies [5]. Previous reports highlight that unit costs of waste management vary widely across countries and facilities, influenced by structural factors such as waste composition, segregation practices, transportation distance, and treatment/incineration technology. The cost reduction observed in outsourcing, particularly in facilities with higher waste volumes, is consistent with these findings of the present study. Moreover, these results align with research showing that improved segregation and economies of scale can substantially reduce the cost per kilogram of treated waste [6]. Domestic evidence also supports that outsourcing reduces operational expenditures and improves efficiency. A systematic review in Iranian hospitals confirms that outsourcing can reduce costs and enhance efficiency but its success critically depends on clear contracts, rigorous oversight, and effective risk management [7].
Limitations
Data were obtained from a limited number of hospitals within one region, which may limit the generalizability. Analysis relied on predefined assumptions regarding inflation rates and cost trends; thus, extreme fluctuations or external factors could influence the results. In addition, this study was limited to financial dimensions and did not assess non-financial outcomes such as service quality, environmental impact, or staff and patient satisfaction, which require further investigations.
Conclusion
Overall, outsourcing hospital waste management and treatment proved more cost-effective compared to the in-house approach, with potential to substantially reduce financial burden on healthcare organizations. ACER analysis demonstrated that outsourcing delivers higher efficiency at lower cost, and sensitivity analyses confirmed the robustness of this advantage under different cost and inflation scenarios. The success of outsourcing highly depends on proper implementation, transparent contracts, continuous monitoring, and stakeholder engagement. Future research should include non-financial outcomes such as service quality, environmental impacts, and social considerations, for a more comprehensive comparison of these approaches.
Declarations
Ethical Considerations: The study was approved by the Ethics Committee of the School of Public Health, Shahid Sadoughi University of Medical Sciences, with the ethics code IR.SSU.SPH.REC.1403.050.
Funding: This research was financially supported by Shahid Sadoughi University of Medical Sciences, Yazd, Iran. Funder had no roles in conducting the research, data collection, and analysis and paper preparation.
Conflicts of interests: None.
Authors’ contributions: M.R.: Conceptualization, study design, methodology, supervision, project administration, data analysis, writing–original draft, writing–review & editing, final approval; G.A.T.: Study design, data curation, validation, data analysis, writing–review & editing, final approval; P.N.: Data collection, data curation, validation, writing–review & editing, final approval. All authors have read and approved the final version of the manuscript
Consent for publication: None.
Data Availability: The datasets generated and/or analyzed during the current study are available from the corresponding author on reasonable request.
AI deceleration: None.
Acknowledgments: This article is derived from the research project (Code: 17511) entitled “Economic Evaluation of Hospital Waste Treatment through Outsourcing versus In-house Management in Selected Hospitals of Yazd, 2023”, conducted at Shahid Sadoughi University of Medical Sciences, Yazd, Iran. The authors would like to sincerely thank the managers and staff of the participating hospitals for their valuable cooperation in this study.
Type of Study: Research |
Subject:
Health Economics
Received: 2025/07/5 | Accepted: 2025/11/21 | Published: 2025/12/8
Received: 2025/07/5 | Accepted: 2025/11/21 | Published: 2025/12/8
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