Photo: Mike Paulson
Blood Systems Inc. Succeeds With A Delicate Balancing Act
When donating blood, many people probably only have a vague understanding of how the entire process works. Most donors certainly don’t understand how complex the mechanisms are that take blood to its final destination, or about the people who make it all happen.
“The general public does not understand what goes on behind the walls of a blood bank,” says Susan Barnes, Vice President and Chief Financial Officer for Blood Systems Inc. “I actually had someone say to me, ‘Oh, you’re the guys who take my blood, don’t give me anything for it and then sell it to the hospitals and make a fortune.’ I said, ‘There’s a lot in between that you don’t know.’ ”
Founded in 1943 as the Salt River Valley Blood Bank, the nonprofit Blood Systems is one of the nation’s oldest and largest blood service providers with operations in 18 states. Blood Systems is also a high-tech, efficiently run company entrusted with a life-or-death mission.
“We budget very carefully to return to the bottom line just enough to allow us to re-invest in our facilities, in processes that the FDA requires, and to keep things state-of-the-art so we can make sure we always provide the quality of blood product that the community expects,” Barnes says. “Not everyone understands that we can’t have a zero bottom line just because we’re a not-for-profit. It’s important to make money to re-invest, because if you don’t re-invest in the organization, you can’t continue the mission.”
Blood Systems mission is “to make a difference in people’s lives by bringing together the best people, inspiring individuals to donate blood, producing a safe and ample blood supply, advancing cutting-edge research and embracing continuous quality improvement.”
To keep such a noble mission in these trying times is a difficult balancing act, says Blood Systems President and CEO Dan Connor.
“In this particular environment that we have now with the economy, we see many companies laying off folks, so there are fewer people available to donate blood and that makes our job more difficult,” Connor says. “Our hospitals are less able to withstand any new tests or new procedures or new costs that we might have to pass along. As a result, we are trying to do that balancing act between doing everything we can to ensure an ample and safe blood supply, while also understanding the limitations that hospitals face as far as paying a reasonable cost for the blood products that are provided to their patients. That’s particularly difficult right now.”
Thanks to Barnes’ financial acumen, Blood Systems has built up a strong bottom line in its cash reserves.
“These reserves allow us to proceed with projects and expenditures, as well as still give our employees a cost-of-living increase in those years that we are not going to generate as much cash,” Barnes says. “There are also those years that we know our customers (hospitals) cannot afford to absorb our entire increased costs, and these reserves allow us to hold some of these new costs without our usual reimbursement.”
Perhaps Blood Systems greatest strength to its bottom line is its diversification, which has helped the company create new and needed revenue streams. That diversification is centered on four main divisions.
The Blood Centers Division is a network of more than a dozen regional blood centers and about 70 donor centers stretching from the West Coast to the Gulf of Mexico and from the Canadian border to the Rio Grande. The centers are operated through United Blood Services and Blood Centers of the Pacific, and serve patients in more than 500 hospitals. Last year, nearly 700,000 people donated blood an average of 1.5 times through the Blood Centers Division.
The Blood Systems Research Institute in San Francisco has conducted scientific research into transfusion medicine for more than 50 years, studying infectious diseases such as HIV and the West Nile virus. A second institute is located in Tempe.
Blood Systems Laboratories operates two of the most highly rated and high-volume blood-donor testing and infectious disease reference laboratories in the nation. The labs in Tempe and the Dallas area tested about three million donations in 2007, with two-thirds of the blood coming from other nonprofit blood centers.
BioCARE distributes plasma derivative therapies available to patients 24 hours a day, every day of the year at more than 200 locations across the country.
Blood Systems is also extending its reach internationally. For about the last four years, Connor says Blood Systems has sent the plasma portion of blood donations to the United Kingdom in order to help that country reduce the risk of transmitting the human form of Mad Cow disease.
But diversification alone hasn’t made Blood Systems a company that just recently received an upgraded ‘A’ stable credit rating from Standard & Poor’s at a time when many other companies are being downgraded. Blood Systems has instituted performance-improvement efficiency standards such as Six Sigma and LEAN tools, which have resulted in the reengineering of processes in the Blood Centers Division and Blood Systems Laboratories. That in turn has improved efficiencies and ushered in cost savings of more than $2.5 million throughout the organization in 2007 alone.
Blood Systems is also investing in its human capital by developing its own program to produce specialists in blood banking.
“We were having trouble finding qualified blood banking specialists to staff our laboratories,” Barnes says. “We partnered with the University of Texas Southwestern Medical Center (at Dallas), and wrote the actual online modules to train the students and taught them through the University of Texas to become specialists in blood banking.”
Blood Systems graduated its first class of specialists in blood banking in 2007.
“It’s basically growing our own blood banking specialists,” Barnes says. “We have the opportunity to put our own staff through the course and allow them to earn the certification. This enhances their careers while staffing our laboratories with the most qualified specialists.”
Making such long-term investments in its employees’ futures has helped Blood Systems decrease turnover by more than2.5 percentage points from 2006 to 2007, with the average length of service now up to almost seven-and-a-half years. And then there’s the mission.
“When I interview a candidate for a job here at Blood Systems,” Barnes says, “one of the things I always make a point of telling them is it doesn’t matter whether you’re collecting blood from a donor, or volunteering to give the donor a cookie and juice afterward, working in our testing laboratory, or working in accounting and finance — everyone who walks in the door every morning understands and is proud of the fact that they’re helping to save a life that day.”