The blood business: A supplier change in Central Arkansas | Arkansas Blog

Wednesday, October 11, 2017

The blood business: A supplier change in Central Arkansas

Posted By on Wed, Oct 11, 2017 at 7:38 AM

click to enlarge A CHANGE IN BUSINESS: The Red Cross will no longer be in the blood collecting business in Cenral Arkansas.
  • A CHANGE IN BUSINESS: The Red Cross will no longer be in the blood collecting business in Cenral Arkansas.
The Arkansas Democrat-Gazette called attention today to a change late last year in the blood business in Arkansas — the supplying of blood to Central Arkansas hospitals by the Arkansas Blood Institute, a nonprofit, rather than the Red Cross.

The latest development is that the Red Cross is getting out of the blood business entirely — including collecting  — by January in Central Arkansas. This will mean a layoff of 44 Red Cross employees at centers in Little Rock and Russellville.

One sidelight unmentioned in the news is the size of the business in financial terms. The blood suppliers are nonprofit and rely on donated blood. But the blood is sold to hospitals and others.

The Arkansas Blood Institute, now the major collector and seller in Central Arkansas, is affiliated with the Oklahoma Blood Institute. A 2014 article in an Oklahoma City newspaper explained how it operates there in reporting on a lawsuit involving the Institute and a Minnesota blood broker:

Donors often believe their blood is given to local hospitals, and all donations stay in the community — neither of which is true. A pint of blood in America sells to hospitals for $180 to $300, depending on the market, and expired blood often is sold to research laboratories, said Ben Bowman, chief executive of General Blood, the blood broker engaged in a legal tussle with Oklahoma City-based OBI.

Bowman’s company, formed four years ago, acts as a middleman between blood suppliers, like blood donation centers, and buyers such as hospitals and research laboratories.

It’s an unusual industry because the product is completely dependent on donors, who aren’t paid for their donation. Yet selling the blood — which technically is a pharmaceutical product—makes millions of dollars for nonprofit entities such as Oklahoma Blood Institute.

“We have a charitable side, which is trying to motivate people to do an amazing thing to help their fellow man or woman,” said Dr. John Armitage, OBI’s chief executive officer. “You turn that around: We are providing a drug. On the business side of what we do, the comparison is to a pharmaceutical company.”

According to tax forms filed with the IRS, OBI generated $85.6 million in the tax year ending March 31, 2013.

And its top executives are well paid. Armitage reported earning $421,561 from OBI that year. Numerous others were making six-figure salaries, including Chief Financial Officer Randall Stark, who reported earning $202,886, and Chief Medical Officer James W. Smith, who earned $273,597.

The organization has six vice presidents, all making $140,000 or more.
Note that the Arkansas Blood Institute says on its website that it is committed to serving the local area, not hospitals outside of the state, and that it relies on Arkansans "donating blood for Arkansans." No one from the Institute spoke with the D-G beyond a joint statement on the end of Red Cross efforts in the region.

With this change, the Red Cross will focus on other humanitarian services in Arkansas, a spokesman said.

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