An open letter to the U.S. health care community: steps to ensure a strong national blood supply

August 2018

By Chris Hrouda, president, Biomedical Services at the American Red Cross

Industry professionals and transfusion medicine experts have warned of the perils that befall a weakened blood system. Via a growing list of publications, these thought leaders have expressed concern that the vitality of the US blood supply is severely threatened. Unfortunately, their efforts have merely served to sound the alarm, but failed to ignite action or reform. With nearly fifteen percent of all hospitalizations involving one or more blood products, patient care is fundamentally compromised when blood is not readily available and the safest, most effective blood products cannot be accessed due to cost.

The American Red Cross has seen red cell distributions drop nearly one-third over the past decade and this decline is expected to continue. Some estimates are that the industry will decrease by 40% overall. Furthermore, there is an increased demand for universal types that offer hospitals greater flexibility when stocking fewer products, but only serves to amplify the challenges blood centers confront when collecting blood from an already limited and diminishing donor pool.

Transfusing less blood is appropriate for improved patient care. Red Cross fully supports responsible transfusion practices and has worked to educate hospitals on the need for less blood. In fact, Red Cross helps drive down blood usage by assisting hospitals enact patient blood management strategies and programs designed to transfuse effectively.

With fewer transfusions, blood providers have responded accordingly by reducing infrastructure and recruitment and collection activities to better contain expenses. Through less volume and controlled expenditures, the industry has shed an estimated $1.3B in expenses since 2009. Red Cross itself has eliminated more than $500M by restricting excess capacity and implementing other cost containment initiatives.

Now blood centers, including the Red Cross, face the pressure of balancing overall collections capability while maintaining sufficient blood product inventories to meet critical need. The capacity to quickly mobilize collections is limited and hospitals and blood centers are unable to maintain adequate blood reserves to respond to surge demand. Acute blood shortages such as those experienced nationwide this summer are increasingly more common and will continue if action is not taken.

Compounding this burden is the regulatory landscape for donor eligibility, component testing and recipient safety that grows progressively more rigorous. Blood providers struggle to keep pace. While these important safety measures are needed for both donors and patients alike, they have markedly increased the complexity of operations with insufficient remuneration for the expense and labor burden incurred by blood collectors. Today, blood centers are challenged to maintain a viable donor base, particularly rare-type donors in light of the escalating cost of recruitment and the mounting requirements pertaining to hemoglobin levels, TRALI risk and travel deferrals, as well as for HLA, ferritin and Zika virus testing.

Despite the credible efforts by blood centers to control costs, these have not sufficed. Most blood products distributed in the US are supplied at a cost lower than that to produce them. The disparity between escalating costs and diminishing prices is highlighted when comparing Medical Consumer Price Index (MCPI) to average sales price. Between 2010 and 2017, the Red Cross average red cell price decreased by 11% whereas MCPI increased by 26% (as reported by the Bureau of Labor Statistics).

Simply stated, gaps in meeting hospital and patient needs are not acceptable and blood providers operating at a loss is not sustainable. The American Red Cross, like all blood collectors in the US, is a nonprofit organization and operates on a cost recovery basis to preserve a blood supply adequate to meet patient needs. To deliver the service expectations of our customers and ensure the long term financial stability of our industry, increased cost recovery is essential.

Improved cost recovery for blood centers can be achieved through two primary channels: innovation and pricing. First, by modernizing operations, upgrading platforms and developing creative partnerships with hospitals and industry associates, blood centers can improve their financial position. Red Cross has dedicated resources within our Innovations Office to drive productivity and efficiency through transformation, modernization and new technologies.

The second source of cost recovery for blood centers is raising prices for products and services. As such, the American Red Cross will be increasing prices to its hospital clients, several of which have already received notification of these changes. Moving forward, pricing offered by the Red Cross will be commensurate with the value of these vital products and services and reflect the true cost to collect, produce, test and distribute blood in today’s environment. As we have done in the past, Red Cross will continue to advocate for increased reimbursement for in-patient and outpatient services from Centers for Medicare & Medicaid Services (CMS) to hospitals for the products and services we jointly provide.

Red Cross is committed to the wellbeing of the blood supply and determined to secure its future. We continue to devote the necessary resources to strengthen our infrastructure as we invest in innovative donor recruitment programs and new, safer blood products to enhance blood inventories and restore the resilience of the blood system.

Without these immediate changes an adequate and safe blood supply cannot be guaranteed. The American Red Cross stands ready to collaborate with our hospital and other industry partners to rebuild the stable supply of blood products and services essential to patients and hospitals. Ensuring the sustainability of the nation’s blood resources is the highest priority of the Red Cross and the industry.