Medical Wastes

By Robert Gariano

In 1987 vacationers on New Jersey and New York beaches were horrified to observe medical wastes like used hypodermic syringes and used surgical supplies being washed onto the shore by the thousands. Vacationers fled the contaminated beaches in droves.

The episode was characterized in the media as the Syringe Tide. State and local officials reluctantly closed the beaches while the source of the waste was identified. The materials were eventually traced to the Fresh Kills Landfill on Staten Island. The event cost the shore communities billions in lost tourist revenues. Pushed by public outcry over the desecration of some of the busiest and best loved seashores in the country, the next year the US Congress passed the Medical Waste Tracking Act of 1988. While this placed stringent regulations on the disposal of such infectious wastes, there were no commercially viable solutions to meet those requirements.

In 1989 a small group of North Shore Chicago investors decided to start a company that would fulfill these market needs. In particular, the group wanted to offer a service to hospitals, blood banks, and other medical waste sources to help them safely handle and then dispose of their medical waste. They called the new company Stericycle.

The company would not only treat the waste and render it noninfectious without deleterious air pollution, it would also provide safe and reliable collection methods. The new company would even help train their clients how to safely handle biohazards and contaminated instruments. A crucial development in those early years was the invention of a thermal method for disposing of infectious waste without generating dangerous pollution as is the case with other incineration methods.

The enterprise was not an immediate success, but the investors were tenacious. In 1991 the company had sales of $1.9 million from 12 clients and was still operating below breakeven. That year the board hired Mark Miller as CEO. Miller had a successful career as an executive at Abbott Labs and he knew that the market requirements for the new company’s services were vast.

All during the early half of the 1990s the company struggled with cash flow and the need to invest in new facilities. The investors provided unfailing support and Miller pressed on by installing waste treat facilities in Washington State, Wisconsin, Rhode Island, and California, providing a footprint that would serve customers across the country. The company’s commitment to their customers and to the environment did not waiver throughout these early, lean years.

Meanwhile, Stericycle continued to invest in new technologies and in facilities even as the customer community expanded. Outpatient facilities, urgent care centers, drug treatment centers, medical laboratories, dentist offices, and even ambulance companies and police departments were looking for responsible ways to dispose of bio hazardous waste and infectious materials.

By the end of 1996 company sales had reached $25 million annually and the company was listed as on NASDAQ. This infusion of capital turbocharged the company’s strategy. That same year, Stericycle purchased Waste Management’s medical waste treatment business. In 1998 alone the company acquired 12 other waste treatment companies. In 1998 the company also expanded internationally setting up operations in Mexico City and Brazil.

In 1999 Stericycle purchased Browning-Ferris Industries’ medical waste business. BFI was the largest medical waste treatment company in North America. The BFI acquisition added 120 locations to Stericycle’s network, while reinforcing their market position in Canada and Puerto Rico.

One of the advantages of an acquisition strategy goes beyond market share and facilities purchases. An acquisition is a chance to bring compelling new talent into an organization. Charles Alutto was part of such a management team that the company acquired in 1997. Alutto quickly distinguished himself both with his leadership skills and business acumen. He ran the company’s European business during a period of rapid expansion. In 2011 he was named President of Stericycle USA. In January 2013, the board of directors elected him President and CEO of the company. 

At age 48, Alutto runs one of the largest and most successful public companies on the North Shore. Stericycle’s market capitalization passed $10 billion early this year with revenues of $2 billion. Visiting the company’s headquarters in the far northwest corner of Lake Forest, a visitor is struck by the modest facilities. The company is just west of Interstate 94 and in the parking lot traffic noises compete with the gentle fragrance of popcorn from a nearby confectionary plant. Stericycle is not a company that regales itself in fancy offices. It is a company that takes its social responsibilities and its investment stewardship seriously, to help provide safe treatment of medical wastes and to educate its customers about how to accomplish that goal.

But Stericycle is also a company wrapped up in the excitement of creating a new business and in developing value for shareholders. Miller said it perfectly when he was interviewed by Chief Executive, an online business magazine in 1993. “I realized that part of what I enjoyed was a team of people who are charged up to create something,” says Miller, an affable and easy going former high school football star. “It is that buzz of creating something new.” The Stericycle team has certainly been successful in achieving that goal.