(FORTUNE Magazine) – Hospitals have a big garbage problem. States are tightening dumping regulations, disposal costs are going up, and largely because of AIDS, the amount of medical waste from hospitals reached 360,000 tons last year. Says Kathryn Wagner, a project director at the Congressional Office of Technology Assessment: ''Hospitals are under great pressure to look for cheaper and environmentally sound disposal technologies.'' Sounds like a business opportunity. ABB Sanitec, a Roseland, New Jersey, unit of the $21-billion-a-year Swiss and Swedish giant Asea Brown Boveri, has devised the ultimate medical-waste disinfection system: a microwave oven that costs $600,000 and weighs nine tons. It shreds debris to 12% of its original volume, sprays it with water, and then zaps it clean. ABB Sanitec's first customer, Forsyth Memorial Hospital in Winston-Salem, North Carolina, estimates the system will pay for itself within three years. Stericycle, a privately owned Chicago company (estimated annual sales: $2 million), expects to achieve 100% recycling of medical debris by 1991. After collection in Chicago, Memphis, New York, or Milwaukee, it ships the waste to a plant outside Memphis, where it is sterilized by irradiation and then sorted. Combustible matter such as cotton sheets and paper gowns becomes fuel for industrial ovens. Syringes and other disposable plastics get melted into material for new products. The company charges hospitals some 40 cents per pound for the service. Sanipak Pacific, a private Tracy, California, company (estimated annual sales: $10 million), makes a $120,000 device that sterilizes medical garbage with steam, then crushes it into a container for disposal in landfills. Medical Safetec, a $2.8-million-a-year public company in Indianapolis, sells machines for as much as $330,000 that disinfect waste with bleach and pulverize it into a residue resembling confetti -- suitable for landfills, but unfortunately nothing else.