Local Hospitals Brace for Higher Blood Costs
Orange County hospitals depend on a steady flow of blood. But officials say they need an infusion of extra money to cover a pending price hike from the American Red Cross.
The Red Cross is raising its prices for blood and blood products by 28.6% come July 1, said Marc Jackson, spokesman for American Red Cross Blood Services’ Southern California region. About 150 hospitals in Orange, Los Angeles and San Diego counties are affected, Jackson said.
“Most people have been understanding,” Jackson said. “Nobody likes it, but our costs have gone up substantially.”
Hoag Memorial Hospital Presbyterian anticipates paying $500,000 more a year for Red Cross blood and blood products, said Randy German, manager of the Newport Beach facility’s blood bank program.
But German said Hoag is working to offset Red Cross cost increases through its own blood drives.
“We have a hospital-based donor program with good community and employee support,” he said.
Hoag officials recently issued an alert about a possible blood shortage in OC. Since then, German said, the hospital has collected 80 units of blood in a week’s period.
Overall, Hoag’s blood center collects some 6,000 units of blood a year, according to German. Because of that, he said Hoag is able to fulfill 40% of its blood needs on its own.
German said he understands why the Red Cross is upping its blood prices. The organization is coping with increased blood demand, the need to hire more workers to collect blood and new technology to improve safety and regulatory requirements.
“Without the Red Cross, this local area would be in trouble. Running a blood center is not profitable,” German said.
Those same challenges affect Hoag’s blood center, he said.
More blood donations are needed throughout California, not just OC, according to German.
“One-third of our blood comes from out of state. California is not self-sufficient,” he said.
Saddleback Memorial Medical Center estimates it will pay $50,000 more a year for blood, said Hugo Folli, executive director of ancillary services at the Laguna Hills hospital.
“We have very little choice,(the Red Cross) is sort of the main supplier,” Folli said.
If Saddleback and other hospitals don’t pay what the market charges, he said, “You don’t have blood. We’re all in the same boat.”
Folli didn’t have an estimate on how much of Saddleback’s blood comes from the Red Cross.
“We try to do blood drives as much as possible,” he said.
Saddleback finds blood donors through several sources, including community settings, churches, through its physician staff and by tapping hospital employees, he said.
Like Hoag’s German, Folli said the biggest challenge to ensuring adequate blood supplies is a lack of donors.
In particular, he said that Saddleback Memorial, in the past, has “had to make some tough choices” about providing services because of blood issues.
The national Red Cross has cited financial issues as the reason for its price hikes.
“We plan to reduce our corporate overhead expenses by at least $50 million over the next three years,” a fact sheet says. “However, despite efficient management of our resources, we cannot avoid charging higher prices for our blood products.”
Nationally, the Red Cross has taken on nearly $335 million in debt to improve its blood centers but hasn’t maintained investments in employees and technology systems.
The national Red Cross has supported improvements with $60 million more annually than the revenue it generates, according to a blood services regional newsletter.
“Over the past decade, Southern California Red Cross Blood Services alone has suffered losses exceeding $30 million,” the newsletter said.
The Red Cross also pointed out in the newsletter that its blood fees have remained below medical inflation hikes and “well below the cost increases of other pharmaceuticals.”
Specifically, the Red Cross said that its costs to collect, process, test, transport and distribute blood products have increased 27% since 1996, while fees charged for products have only increased 9.9%.
As for possible future price hikes, the Red Cross’ Jackson said that’s hard to predict because of issues such as testing, research and development. n
