There is a continuing cost pressure felt by the industry as it adjusts to the costs of blood safety.

Blood intended for transfusion is donated for free by volunteer donors. However, there are numerous additional costs to readying blood components for transfusion including:

• Donor recruitment
• Blood collection equipment and blood bags
• Phlebotomy nursing staff
• Disease testing mandated by the FDA on all units of blood
• Labeling, storage, and distribution

Since the blood center must recover these costs, it charges the hospital a fee for each unit that the hospital uses. As a result of competition and other pressures, however, many blood centers have been operating at a loss for years.

To move beyond this financial crunch, some blood centers increased prices in the spring of 2001 to better cover their costs of collection. In July 2001, the Boston Globe published an article noting that the fee for red cell units in New England had risen from $90-$120 per unit to $180 per unit. Hospitals were frustrated, wondering how they would cover this increased fee. Blood is currently not separately reimbursed in the U.S. Medicare system; instead, it is included in reimbursement for a medical procedure, or the type of surgery performed. Given rising health care costs, this is an issue that will most likely heat up over the next few years.

Haemonetics' Response: Automation

The following table illustrates the economic benefits received by a blood collector by adopting the use of automated double red cell collection.

One Whole Blood Donation		One Double Red Cell Donation
Revenue (Red blood cell/Plasma)	$137.50	Revenue (Two units of red blood cells)	$250.50
Testing	(22.13)	Testing	(22.13)
Recruiting	(12.00)	Recruiting	(12.00)
Disposable	(5.00)	Disposable	(51.18)
Other	(16.53)	Other	(23.28)
Contribution	$81.84	Contribution	$141.41

Clearly the revenue impact is strong: selling two units of red blood cells yields a higher revenue stream. Margin is also dramatically improved, as recruiting and testing costs remain the same with one donor giving two units. Note also that this model assumes a selling price of $125 per unit of red blood cells, while in many regions, that selling price is even higher.

Automated collection yields efficiency gains and assists in alleviating supply problems. As illustrated here, it also provides an economic benefit to the blood collection community.