Miami Herald - November 9, 2004
John Dorschner, jdorschner@herald.com

Florida's Blood Centers of Orlando has offered to purchase the assets of financially troubled South Florida Blood Banks, the loser in the region's blood wars, as its business has steadily eroded because it hasn't been able to supply its customers' needs.

SFBB was charging less for its blood than it cost, and it saw its market share in Broward and Miami-Dade slip from 50 to 28 percent.

FBC Chief Executive Anne Chinoda said SFBB approached her a month ago about the takeover. She said the firms expected to take up to 90 days to work out the details needed to close the deal. Both firms are nonprofit.

SFBB, based in Lake Park in Palm Beach County, was the loser in the blood wars with Community Blood Centers of South Florida, the Lauderhill-based company that took over the American Red Cross operation in 1998. The two firms supply virtually all the blood used in Broward, Miami-Dade and Palm Beach counties.

Earlier this year, SFBB's problems became a crisis when Jackson Health System complained it wasn't supplying its needs.

"We needed blood for transplants, for trauma," said Jackson spokeswoman Maria Rosa Gonzalez/Carrero. "For two years, I was asking the community for blood. I was doing their work for them. I was scrambling, looking for solutions. We were showing people empty shelves," where blood supplies should have been.

In June, Jackson decided it had enough and switched to Community Blood Centers, which now boasts that it has virtually all the major hospitals in the area, including Baptist Health South Florida, the facilities in the North Broward and South Broward hospital districts and the Tenet hospitals.

Only HCA's local hospitals and Mercy in Miami remain SFBB customers. Community collects about 225,000 units of red blood annually, compared to SFBB's 90,000.

SFBB lost $1.3 million last year and had accounts payable of $4.86 million, as of Sept. 30, 2003, according to its federal tax filings. Its loan, note and bond debt totaled $11.67 million, while total revenue was $17.2 million.

Community's most recent tax return, listed on GuideStar.org, shows total revenue of $41 million and an excess of $3.2 million.

FBC's Chinoda said the final blow for SFBB was the hurricanes that swept through the region, dramatically reducing the blood donors during September. "That's when they realized they couldn't go on by themselves," she said.

John Flynn, SFBB's chief executive who was earning $217,000 in salary and expenses, volunteered to step aside, Chinoda said. Flynn could not be reached for comment Monday.

FBC brought in KMPG auditors to exam SFBB's books, and found that the nonprofit had a fundamental business problem: Each pint of blood it processed cost more than it charged.

Charles Rouault, chief executive of Community, shrugged off the takeover of his only competitor. "South Florida [Blood Banks] draws so few donors, I would say it would have no impact on essentially anything. I can't imagine what they're going to do."

FBC said it plans to send teams in to help SFBB immediately, including technical and marketing people to help increase donations.

"We are totally mission-driven," said Chinoda. "We believe the market is diverse enough, and the number of transfusions growing, that we can play a valuable role."

She says that the way FBC works, all blood donated in a county will remain in that county. FBC, founded in 1942, currently has operations in 17 counties, ranging from Ocala to Stuart and Fort Myers.

Rouault doubted that FBC could make much of an immediate impact. "In donor recruitment, it takes four to six months for your efforts to pay off. They're going to have to wait a while for results."

Community and SFBB have frequently engaged in bitter battles, including offering scholarship funds to local high schools of up to $20 for each pint of blood donated by students. Critics claim that went against the American system of purely voluntary donations.

SFBB was originally called the Palm Beach Blood Bank. It changed its name in the 1990s when it moved aggressively into Miami-Dade and Broward by undercutting other prices. At one point, it controlled about half the blood market in Dade and Broward.

Jim MacPherson, head of America's Blood Centers in Washington, D.C. which represents most community organizations, said there were "some real tough economic times" in the 1990s, which caused blood banks to merge, mostly based on increased testing costs because of AIDS and heightened regulatory concerns.

But in recent years, the field has been "pretty stable financially." He called the SFBB financial troubles "an exception."

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