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America’s Blood Economy: Vulnerable To Economic Trends, Medical Advances

Karen Brown
In the American Red Cross Bloodmobile with donor Greg Dibrindisi and nurse Tina Holman.

Most days, somewhere in New England, the American Red Cross and other blood banks put out the call for donations — and volunteers offer up their veins for the public good.

At a recent blood drive outside a yarn store in Northampton, Massachusetts, donors paraded in and out of a Red Cross Bloodmobile at a slow but steady space.

As one regular held gauze over his punctured arm, the nurse told him he was free to leave. “Make sure you feel OK,” she said. “Would you like a water?”

“Juice, maybe,” he replied.

A Drop In Demand

These donors don’t get paid for their blood. But while the raw product is free, the process around collecting and distributing the blood is not.

H ospitals pay blood banks for components — like plasma and red blood cells — and blood banks use that income to stay viable, even when donations are down.

But over the past decade, medical advances have had unintended consequences on this delicate balance.

“Every year, we’re seeing less total components transfused,” said Darlene Cloutier, lab director at Baystate Medical Center in Springfield, Massachusetts.

Doctors have learned to perform common surgeries with minimal blood loss, so they rely less on transfusions. Cloutier said that’s allowed them to avoid the risk — albeit low — of exposing someone to another person’s blood. And she said outcomes have improved.

“The patients that were transfused fewer units typically have lower lengths of stay and better recovery,” she said.

This also means hospitals buy less blood from the Red Cross and other private blood banks. Cloutier said Baystate uses about two-thirds as much blood today as it did five years ago, with some coming from its own, in-house donation program.

UMass Amherst business professor Anna Nagurney, who studies the blood supply, said this is typical across the country.

“The demand has gone down,” Nagurney said. “So that’s a huge issue because various blood service organizations now. They have to reduce their prices.”

‘A Very Urgent Situation’

That may be good for hospitals, which are under pressure to cut costs, but it’s not so good for blood banks. Nagurney said nationwide, between 2008 and 2014, blood bank revenue fell from about $5 billion to $1.5 billion.

“We believe this creates a very urgent situation,” said Ziggy Szczepiorkowski, president of the American Association of Blood Banks.

He said a drop in blood bank revenue has led to staff layoffs, less money for research and development and less  private investment in innovation or infrastructure.

“If you don’t have money to replace your equipment, your equipment is getting older and older,” he said. “So on a very basic level, you start to see older equipment, which is going to fail more frequently.”

An Unusual Commodity

Many blood banks have merged or consolidated, which may help with short term budgets, but Szczepiorkowski said it doesn’t get at the root of the problem — namely, a payment structure that allows blood to be treated like any other commodity.

“Under normal circumstances, you would think that blood industry would sort itself out, as a market force,” he said. “We don’t believe it’s going to happen without exposing our society to potential very high risks.”

For one, you can’t stock up on blood. It’s perishable. It lasts on a shelf between 5 and 42 days, so it’s tricky to collect just enough to fulfill the orders from hospitals, but not so much that it gets wasted.

And with the downsizing of the industry, Anna Nagurney of UMass worries that, if there’s a sudden demand for blood — say, a natural disaster or terrorist attack — blood banks won’t have the capacity to collect it in a hurry.

Plus, new viruses like Zika both reduce the supply of safe blood and raise the cost of testing it.

Looking For a Blood Safety Net

“Then you get times of great need, for example, like the holiday season,” Nagurney said. “And it’s really challenging, especially now in the winter season, because if you have a cold or flu, you’re not supposed to be donating blood. So that also decreases the supply.”

As a solution, Nagurney would like the blood bank industry to be more deliberate about its mergers and downsizing. Her own research looks at ways to make the blood supply chain more efficient.

“If they were able to, say, cooperate — right now they tend to compete with one another — then there could be some really good synergies,” she said. “We could have supply matching demand better.”

Last year, a Rand Corporation study confirmed the flux and uncertainty in the blood economy, recommending more investment by the U.S. Department of Health and Human Services, to create a sort of blood safety net.