Disposed of in the hospital incinerator, perhaps. A sought-after fuel? Tabloid tripe. The organic stuff will be a net user of energy, not a source. The source will be mainly paper and plastic.
If hospital A is seeking medical waste from hospital B, they are probably getting paid to dispose of it. But they'd be taking mixed waste material, not dead babies in particular. The suggestion of the later, again, is tabloid tripe.
Keeping stuff that shouldn't be there out of the medical waste stream does seem to be a challenge. There was that case not too long ago when a kidney-for-transplant was thrown away....
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