So, you’re managing your organization’s medical waste disposal department, and you’ve made a few changes to meet your goal of decreasing costs and increasing efficiency and safety. That’s wonderful! How do you plan to evaluate ROI on medical waste management solutions you’ve implemented? Let’s take a look at some strategies you can use to determine the effectiveness of your program.
What is ROI?
Return on Investment (ROI) is an indicator of whether the changes you’ve implemented have positively or negatively impacted your organization’s bottom line. Basically, it tells you if the time, energy, resources, and money you invested in creating a more efficient medical waste disposal program was worth it.
How To Calculate ROI
ROI is expressed as a number, typically a percentage. You can easily calculate this percentage using the metrics you aim to change. There are several steps involved in the process. Let’s walk through each one.
Start with a Baseline
First, you must start by knowing your baseline. What metric are you aiming to impact when making changes to your program? Are you hoping to save money each year on your medical waste disposal costs? Is your focus on the volume of waste generated each month? Knowing your numbers before implementing your changes gives you a starting point to work with.
Calculate Your Current Numbers
Once you’ve implemented changes in your medical waste disposal program, you’ll need to track the numbers for a period of time. You can track them for as long as you’d like (a month, a quarter, a year). However, be sure that you’re tracking your numbers for the same period of time as your baseline so your comparisons are accurate.
Confirm Your Investment
During the implementation of new policies, procedures, training, and audits, you invested time, resources, and finances. Take time to consider the actual cost of your investment. How many man-hours did you spend developing the program? How much did staff training cost the organization? How much money did you spend on materials? How much money did you allocate towards finding and hiring a new medical waste disposal company? Do your best to quantify the cost in a measure of financial dollars where possible.
Calculate Your ROI
Once you’ve gathered the necessary data, you can calculate your ROI. An ROI of 1 or more indicates a “positive” result that will increase profits/decrease expenses. An ROI of less than 1 indicates a “negative” result, meaning that your investment did not result in cost savings.
You’ll need to determine if your investment was profitable by subtracting the current expenditure from the baseline. Be sure to work with similar variables. For instance, if you’re decreasing the cost of waste disposal pickup per quarter, be sure you’re using two calculations representing quarterly waste disposal fees. In the simplest terms, you have now calculated your profit/loss.
For example, assume that your medical waste disposal cost averages $10,000 per quarter over the last two years. Now that you’ve implemented cost-saving measures, your medical waste disposal cost for the quarter is $5,000. You are running at a $5,000 savings (or profit) for this metric. Let’s also assume you invested $20,000 in medical waste disposal efficiency changes.
To calculate your ROI, divide the net profit/loss by the initial cost. Since your cost was $20,000 and you saved or profited $5,000 over the following quarter, your calculation will be $5,000/$20,000. This is 0.25 or 25%, a negative result. While the result is negative, it does not signify an ineffective program. You’ll need to evaluate your results further.
Evaluate Your ROI
In our example above, the ROI is negative. A $20,000 investment only resulted in a $5,000 savings over the period of a quarter. However, it’s clear that over a period of one year, the ROI would level out to a 1 or 100%, a positive result. While your investment may not deliver an immediate return, these results clearly indicate that you’ll realize a financial benefit in years to come.
Budgeting for waste disposal services is non-negotiable. Failure to do so will lead to environmentally detrimental practices, threats to facility and public safety, and staggering legal consequences. Therefore, the best tactic is to increase your healthcare waste cost savings by performing thorough audits of your program, providing staff with training, investing in cost-effective medical waste solutions, and performing a regular ROI analysis to evaluate the financial impact of your changes on your medical waste disposal budget.
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Established in 2008, MedWaste Management fills a need for compliant and safe medical waste disposal in the healthcare industry and the general public alike. We publish this blog to share valuable and practical information to help you stay safe, informed, and healthy!
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Tammy McKinney, RN, is a healthcare writer and seasoned registered nurse. With experience in acute care, long-term care, rehabilitation, drug & alcohol, and hospice & palliative care, she combines her medical understanding with her love for writing to educate and inform the public on various health-related topics. You can contact her directly on LinkedIn!
