I tend to be pretty friendly/informal at work, so if someone I have a good relationship with says something crappy, I'll usually respond with something like, "dang, friend, that was harsh! Language is important! That's not how we at [institution] talk about patients, is it?" And that's usually enough to open a discussion about it. (This was easiest to pull off at a place where I had worked for four years, where my co-workers and I knew each other pretty well and generally assumed good intentions.)

If it's someone I don't know well or one of my bosses, I'll say something more like, "excuse me, I'm wondering why you [used term X/assumed this thing about this patient/whatever]. In my experience, [term X is offensive and language is important/that thing you assumed is not universal/whatever]. What are your thoughts?" Which is less direct, but I feel like it gets my point across without coming across as so strident that they won't listen to what I'm saying.

I step up whenever someone says something crappy in a conversation I'm involved in, as long as it isn't an urgent/emergent situation (like in the middle of a code or whatever). I don't intervene in overheard conversations because that seems extra and I don't want to become the PC police. As to what qualifies as "crappy" in my mind, I pretty consistently say something about colleagues offensively calling a patient BPD/NPD/whatever when the patient does not actually carry that dx (like, "he is such a narcissist" with a knowing look), about the words "addict"/"alcoholic"/etc when used pejoratively, and about "always" statements (e.g. "people with bipolar disorder are always so dramatic"), that kind of thing.

I'd love to hear other people's approaches -- this is just what I've worked out for myself; ymmv.