The agency's troubles - debt and run-ins with regulators - have led to higher blood prices and a fear that the nation's blood shortage will worsen.
©Los Angeles Times
© St. Petersburg Times, published July 31, 2001
The American Red Cross, the nation's largest and best-known blood supplier, is struggling to overcome financial and regulatory problems that threaten to worsen an already dire national blood shortage, some health officials and experts say.
The Red Cross' troubles have spurred dramatically higher blood prices and left some hospitals scrambling to boost supplies at their own blood banks. The consequences are especially severe in places where the Red Cross provides nearly all of the blood.
"The Red Cross has been reeling from problems," said Dr. Arthur Caplan, head of a federal advisory panel on the blood supply. "It's been a constant battle with the FDA and other regulatory agencies to keep them in business and not throw the whole American blood supply into a disastrous shortage."
The American Red Cross does not collect blood in the Tampa Bay area, concentrating instead on disaster relief. Florida Blood Services in St. Petersburg serves Pinellas, Hillsborough and Pasco counties. LifeSouth Community Blood Centers of Gainesville provides blood to hospitals in Hernando and Citrus counties.
The National Red Cross president, Dr. Bernadine Healy, acknowledged some challenges but called Caplan's comments preposterous and ill-informed. Since she took over in September 1999, she said, top management has been replaced and is working hard to re-establish credibility with regulators, hospitals and donors.
"The organization from the top down, and particularly at the top, has gotten religion on this issue," Healy said. But she said, "We have a very long way to go."
Among the Red Cross' woes are run-ins with regulators, growing debt and waning credibility among hospitals:
The Food and Drug Administration has cited the organization for a "long-standing and ongoing" failure to comply with federal regulations governing blood screening and handling.
After unwittingly distributing HIV-contaminated blood in the early to mid 1980s, the Red Cross in 1993 entered into a court-supervised agreement, called a consent decree, requiring it to improve management and quality control.
But during an inspection of the group's headquarters in April 2000, the FDA found widespread violations of the court order. These included a failure to properly quarantine potentially contaminated blood, to follow instructions on an HIV test kit and to keep track of blood supplies and donor medical histories.
Healy acknowledged she was alarmed and surprised by the seriousness of the findings. But she insisted that the Red Cross' violations overall have declined markedly in recent years and noted that several other blood suppliers are operating under similar consent decrees.
Still, these suppliers, all much smaller than the Red Cross, appear to be in essential compliance with regulators' demands. The Red Cross has not yet satisfied the FDA, which is seeking authority to fine the organization up to $15,000 each time it violates the court order.
The Red Cross is facing a staggering $339-million debt, largely because it had to pay for improved safety measures, a national computer system and construction of nine blood testing laboratories.
Its blood supply division has lost nearly $200-million since 1994. Meanwhile, its board recently was forced to tap a $100-million reserve fund to renovate and rebuild blood centers, increase employees' pay and upgrade computer systems.
To help it break even, the Red Cross raised the price of blood it supplies to hospitals by an average of 10 percent to 35 percent on July 1.
Many hospitals have little choice but to pay because the Red Cross supplies 46 percent of the nation's blood. Massachusetts General Hospital in Boston, for instance, said its blood prices have doubled to about $4-million annually.
The American Hospital Association sent Healy a letter this month saying the "steep" increase will "cripple the ability of many . . . hospitals to meet the needs of their patients and communities."
A spokeswoman for America's Blood Centers, a large network of independent suppliers that controls 47 percent of the U.S. market, said its members generally charge lower rates than the Red Cross and their price increases have been smaller.
The Red Cross and other blood centers are facing a severe and sustained national shortage.
The supply could dip even more in September when, to prevent the potential spread of mad cow disease, the Red Cross will begin prohibiting donations from anyone who has spent more than three months in the United Kingdom or six months in Europe since 1980.
To help rebuild the ranks of donors, the Red Cross is spending $8-million this year on paid advertising.
Paradoxically, critics fear any outcry about the Red Cross will only make the shortage worse -- discouraging potential donors from giving.
"I hate to damn them, because they supply us with blood," said Dr. Emanuel Ferro, medical director of the Long Beach Memorial Medical Center blood bank, south of Los Angeles. "Anything that might cripple those efforts would only do everyone a disservice."
But the Red Cross, a symbol to many people of charity and good works, has already done some damage to its own credibility and mission, Ferro said.
"The more things they get embroiled in, the harder it is for them to collect blood and get blood to hospitals," he said.
Meantime, some hospitals are urgently seeking donors to build their own blood reserves. These centers supply blood on site at a cheaper cost.
There are signs that regulators are losing patience with the Red Cross as well.
According to the FDA, the Red Cross has not complied with the federal Food Drug and Cosmetic Act since at least 1985. Ten times since 1993, the FDA has sent the Red Cross letters detailing significant violations of the court decree.
The Red Cross' "current violations are of deep concern to FDA because of the impact they may have on the safety of the nation's blood supply," the FDA said in a court filing in November.
Faced with the prospect of a $15,000 fine per violation, the Red Cross has challenged the FDA's right to impose such penalties. The organization is seeking a court-appointed mediator to broker a deal.
Regulators have been particularly troubled by one Red Cross blood center in Salt Lake City.
The Red Cross took over the blood center in 1997 at the request of the FDA, which had suspended the license of Intermountain Health Care. But the Red Cross' management hasn't fully satisfied regulators either.
FDA inspectors found 34 violations during a May inspection. Among the most serious: The office failed to quarantine blood despite missing test results, then released the blood for shipment. The FDA report does not discuss whether anyone was harmed.
In another instance, an ineligible donor who had traveled to an area at high risk for malaria was allowed to donate. The blood was labeled for distribution before the error was caught.
"All of that is unacceptable," Healy said. But she added that the organization, despite its many safety checks, cannot root out human error entirely.
It doesn't help, Healy said, that 30 percent to 50 percent of Red Cross employees in some offices leave each year, many because of poor pay. That forces officials to continually train new employees in critical procedures.
Still, Healy insisted, the Red Cross has made steady progress. Of the 27 Red Cross sites inspected by the FDA this fiscal year, 15 of them have had no violations, she said. In addition, total violations logged by the FDA dropped to 103 last year from a high of 633 in 1994.
-- Times staff writer Anita Kumar contributed to this report.