Competition spurs Red Cross to offer discounts on blood

July 14, 1991|By Knight-Ridder News Service

"The Gift of Life" has gone on sale in Baltimore.

In an effort to stimulate sales, the American Red Cross has entered a price war with blood brokers and is offering hospitals in the Baltimore-Washington area discounts of up to 40 percent on blood.

Under the plan, hospitals that buy more red blood cells, plasma or platelets this year than last year will get discounts of 20 percent to 40 percent on the additional pints. Hospitals could save as much as $31.80 a pint by buying more blood.

Red Cross officials in Baltimore say that they were forced to adopt the unusual plan because suppliers from Oklahoma and Florida have begun selling blood to area hospitals at prices $33 to $39 a pint less than the Red Cross was charging. Blood brokers operate blood banks in areas of the country where costs are lower.

As of June 30, the Red Cross charged hospitals in the Baltimore region $86.50 for a pint of red cells, while outside brokers were charging $47 to $53 a pint.

David Simms, chief operating officer of the Red Cross' Greater Chesapeake and Potomac Region Regional Blood Services, said Thursday that the outside brokers captured nearly 10 percent of the market for red blood cells, plasma and platelets in the Baltimore-Washington region over the last year. He estimated that the brokers had sold 20,000 pints of red cells alone in the market.

"I had a discussion this week with one hospital that used to order 100 percent of its blood from us. It now orders 45 percent," he said.

The Baltimore Red Cross blood center laid off the equivalent of 66 workers (the figure reflects full-time positions as well as part-time positions which add up to a whole) in May and, even before its discount offer, had reduced its price for red cells by $7 a pint to try to win back some of its business.

But the discounts are unlikely to translate into lower costs fopatients receiving the blood. Instead, the discounts may only offset price increases that have occurred because of inflation and the myriad tests that blood banks must now perform to screen out infections, said Dr. Paul Ness, a Johns Hopkins physician who is also chief of blood services for the Red Cross' Chesapeake and Potomac region.

Blood agencies must now perform seven tests rather than the two required a few years ago, he said. They have also stepped up efforts to track down and counsel patients who have been exposed to tainted blood.

Several medical directors and executives from non-Red Cross blood banks, all of whom spoke on condition of anonymity, questioned the practice of offering volume discounts. They said that transfusion experts had recommended that doctors and hospitals reduce, not increase, the amount of blood used because of safety concerns.

"I thought we were trying to discourage the use of blood," said one medical director. "In all of my years, I have never heard of such a thing."

Red Cross officials say they faced a unique situation. If they continue to lose sales in the Baltimore-Washington area, they will be unable to supply many blood products, such as specialized platelets and unusual blood types, which the outside brokers have no interest in supplying, Mr. Simms and others said.

Baltimore's isn't the only Red Cross blood center facing increased competition. The Red Cross' regional blood center in Los Angeles has laid off hundreds of workers.

But the Baltimore center apparently is the first of the Red Cross' 53 regional blood banks to fight back with price discounts.

The Baltimore Red Cross' "Community Citizen Discount Program" is intended to demonstrate to hospitals "our seriousness in minimizing costs and fees over the long run," the Red Cross told hospitals.

"The sooner you increase your purchases from us the sooner your price will drop to the discount rate," Diane Russell, a Red Cross Baltimore executive, wrote hospitals.

Mr. Simms said that the discount program started July 1 and had been received well by hospitals. He said that donors had not been informed that their blood might be sold at a discount. "I guess I'm not sure what the issue would be from the point of the donors," he said.

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