NoBlood - View Single Post - Rising blood prices prompt hospitals to find cost-effective alternatives

Jan B. Wade · #1 (**permalink**) 08-01-2003, 10:06 AM

July 19-August 1 The Finance Watch is online at Advisory.com

Rising blood prices prompt hospitals to find cost-effective alternatives to traditional suppliers

07/23/2002

As the cost of blood products continues to climb at a steady pace, many hospitals are facing steep increases in annual blood expenditures. Last July, the American Red Cross began charging 10% to 35% more for blood in order to combat rising expenses, fund construction of additional blood centers, and help pay off almost $300 million in debt incurred from implementing new blood safety measures, according to the Washington Times (Stefanova, 5/24/01). The price hike pushed the cost of one unit of blood from between $130 and $150 to as much as $200 for some regions, forcing many hospitals to search out ways to secure blood products for less.

North Carolina hospitals go it alone with independent clinic
A growing number of hospitals are turning to independent blood centers rather than pay the Red Cross’s rising prices. In fact, a network of 75 independent blood centers currently collects 48% of the nation’s blood supply, while the Red Cross collects 46% and hospitals collect the remaining 6% for their own use, the Associated Press (Nowell, 7/16/02) reports.

In response to a 60% increase in blood prices, 10 hospitals in the Charlotte, N.C., area recently joined forces to open the Community Blood Center of the Carolinas, a not-for-profit center that will collect donations and supply blood products to the region beginning in early 2003. The 10 partner hospitals, which collectively use almost 60,000 units of blood per year, include Carolinas Medical Center and its affiliated hospitals, Gaston Memorial Hospital, Northeast Medical Center, Piedmont Medical Center and Presbyterian Hospital and its affiliates. The participating hospitals will put up $3.4 million to open the center, but officials expect the center to provide an almost immediate return on their investment by reducing the cost of blood from $200 per unit to around $150, according to the Charlotte Observer (Stobbe, 7/17/02). Presbyterian Healthcare system officials, for example, anticipate $3 million in annual savings on blood costs, while Carolinas Healthcare System, parent of Carolinas Medical Center, estimates about $1.5 million in annual savings.

Self reliance: Ohio hospital collects, processes its own blood
Though far rarer than community-based blood centers, hospital-based blood centers have slowly begun to crop up as another alternative to purchasing blood from the Red Cross. According to the Akron Beacon Journal (Powell, 7/13/02), Canton, Ohio-based Aultman Hospital is one of few hospitals in the nation that operates its own blood center, which opened in 1997 and enables the hospital to run donor drives and process the collected blood for use by its patients. Although the hospital spends $1 million per year to operate the Aultman Blood Center, which also collects and processes blood for two nearby affiliates, its “self-reliance” has allowed the hospital to gain community support and keep its costs per unit of blood low. According to hospital officials, Aultman spends $140 to $150 to collect and process each unit of blood, while the Red Cross charges $170 to $215 per unit.

According to the National Blood Data Resource Center, fewer than 10% of the nation’s hospitals run their own blood centers, and most accept only blood from patients for autotransfusion, thus avoiding the stringent testing requirements for donations to be used for patient-to-patient transfusions. Officials at the Ohio Hospital Association said that the challenges associated with collecting and storing blood have thus far prevented other Ohio hospitals from opening blood centers. “It’s a huge undertaking to collect the blood in the first place. I think our hospitals are satisfied to leave that in the hands of the experts at the Red Cross or Community Blood centers,” said an association representative.

Blood conservation prevents jump in blood spending
Some hospitals contend that the best way to decrease blood costs is to reduce the amount of blood used during surgery through blood conservation, which can often eliminate reliance on preoperative donation and donor transfusions. Indianapolis-based St. Vincent and Riverview hospitals’ blood conservation programs include cell-salvage techniques that clean and recycle the patient’s blood during surgery, reducing the amount of blood purchased by each hospital. Riverview’s program, in effect since 1996, has reduced the amount of blood used at the hospital by 80% (Schneider, Indianapolis Star, 6/30/02). Similarly, St. Vincent’s blood conservation strategies have kept the hospital’s spending on blood products from increasing, even as blood prices have risen from $150 per unit in 2000 to $183 per unit in 2001, and to $193 per unit during the first half of 2002, according to Dr. Timothy Hannon, Director of the Blood Conservation Program at St. Vincent’s (Watch interview, 7/18/02).

According to Hannon, St. Vincent’s blood conservation program was initiated in 2000, following four years of 10% to 11% price increases and frequent regional and national blood shortages. The failure of Medicare reimbursements to keep pace with increased blood costs exacerbated the problem, Hannon added. St. Vincent’s blood conservation program uses targeted strategies to ensure proper utilization of blood throughout the hospital, such as specified transfusion guidelines and required use of transfusion order sheets, Hannon told the Watch. The program targets departments with high blood utilization, using multidisciplinary teams to study and implement specific blood-conservation practices, including transfusion-avoidance algorithms and blood-loss-reduction and blood-salvaging techniques.