Monday, October 30, 2017

Take a chance on me (Musings on USA's unsustainable blood system)

Updated: 30 Oct. 2017 (Fixed typos)
For October I've written a two-fer, one blog in two parts. The first part was stimulated by three related items in TraQ's Oct. newsletter (Further Reading):
  • Klein HG, Hrouda JC, Epstein JS. Crisis in the sustainability of the U.S. blood system. N Engl J Med 2017 Oct 12; 377:1485-8.
  • Building a more sustainable U.S. blood system. (Rand Corporation, Research Briefs, Nov. 2016)
  •  Mulcahy AW, Kapinos KA, Briscombe B, et al. Toward a sustainable blood supply in the United States: an analysis. Rand Corporation, 21 Nov. 2016.
PART ONE: This first blog is on USA's non-sustainable blood system. In a way the two blogs Oct. are related. Both involve protecting the SUPPLY of life-saving blood components and products and managing threats to that supply.

EXECUTIVE VERSION: This first blog will discuss sustainability issues in the US blood system. Quite a wake-up call that the American private, market-based blood system is failing.

Why read the blog? To me, it helps if everyone involved in transfusion medicine is aware of the big picture nationally and globally because it helps us interpret background noise that may otherwise fly under the radar.

Moreover, many health professionals outside the USA may not be 'into' the economic conditions that a private blood system, or private healthcare for that matter, operate in.

Allow me two anecdotes. Medical Laboratory Science graduates who went to work in the US in the 1990s told interesting tales of some of the differences between Canada and the US. For example, how each new transfusion service work-up on a patient with difficult red cell antibodies required careful documentation of codes (time-consuming major distractor) in order to charge Medicare / Medicaid properly or to add to the patient's increasing hospital bill.

Or how one grad worked in a Las Vegas mega-lab where technologists were more like factory workers on an assembly line and didn't need to worry about quality control because that was someone else's job. No doubt the huge private lab had wrung every efficiency out of the system in order to decrease costs and compete for business.

The blog's title derives from 1978 ditty by Sweden's ABBA, which I've used once before.

Regarding the USA situation, I recommend viewers read the three fascinating items in Further Reading. The 12 Oct. 2017 'Sounding Board' piece by Klein, Hrouda, and Epstein in New England Journal of Medicine clearly derives from Rand Corporation Research done in Nov. 2016.

What follows are my take-aways about the U.S. blood system. Although I follow events there closely, my grasp of the intricacies of the business side of things is limited. Bear with me as I describe what I see as the 'big pic' of the U.S. system.

Many developed nations have a single, government-funded blood supplier, e.g., Australia, Canada, France, Ireland, New Zealand, UK, and more. The USA opted for a private system composed of non-governmental organizations (NGOs) that sell blood on the open market to hospital clients. The U.S. even has blood brokers who buy from the blood centers who collect and manufacture blood components and sell to hospitals who need components to treat patients.

In the USA's free enterprise blood system, markets rule. The price of blood components and products depend on supply and demand. Suppliers (blood centers) compete for hospital customers based on pricing and service just as for-profit businesses do.

The pressure is on blood centers to produce products more efficiently and reduce the price, or improve a key required quality, so that hospitals will pay more to get it.

Under such a system, assuming no new major injection of funds, businesses, including non-profit blood suppliers, will fail once expenses exceed revenues, and cash reserves and sellable assets are depleted.

The following is my take on the NEJM article and related Rand search.

The U.S. free market in blood struggles for several reasons. These include decreased demand for blood components because of
  • Patient blood management programs that reduce the need for transfusion and decrease healthcare costs, while ensuring that blood is available for patients who need transfusion;
  • Less invasive surgical procedures;
  • Development of drugs that reduce surgical blood loss and decrease the need for transfusion.
In business terms, demand for blood center products decreased. Data point: Blood transfusion decreased ~25% from 2008-2017 and may decrease by 40% by 2020. Accordingly, supplier (blood center) revenue decreased and their cost/unit increased.

The result has been that the client/consumer blood system (hospitals) have increased consolidation to decrease their costs. And blood suppliers now must deal with more large institutions with increased bargaining power, further driving down blood center revenues.

Another reality: Apparently U.S. blood collectors are reluctant to introduce new technologies that make the blood supply and transfusion safer because hospitals won't pay for them unless they are government-mandated, e.g., Zika virus and Babesiosis screening, red-cell genotyping.

Of course, today what determines introducing new blood donor screening tests is risk-based decision making, one factor of which includes economic realities. Decision makers look at factors such as
  • Condition prevalence;
  • How serious the condition/disease to be prevented is;
  • Cost of preventing one case.
Bottom line
Most of America's Blood Centers and the American Red Cross  operate at a loss, provide blood components below cost. The American blood system has become unsustainable.

What to do? 
Rand Corporation proposed three alternatives. Let
1. U.S. blood system continue to function as it has;
2. Government play a more active role;
3. Government assume complete responsibility.

Of course, predictably, they opted for #2 in which the U.S. blood system remains privatized but with some additional government intervention. Translation: The government funds and takes care of safety issues for which a good business case cannot be made by the private sector. Perhaps a form of corporate welfare in a good cause?

As the NEJM authors state (no-brainer, obvious to all)
  • Adhering to supply and demand ignores the importance of safe, available blood because blood is more than just another consumer good.
I dig that USA will never opt for a government-funded blood system as many developed nations have. The transition would be too against the 'land of free enterprise' and too messy a transmogrification.

On one level it seems that USA wants to have its cake and eat it too. I'm reminded of private, for-profit healthcare clinics in Canada that the rich can access. They tend to 'cherry-pick' the healthiest patients, who are the easiest and cheapest to treat AND send those who are very sick and unprofitable to treat back into the government-funded public system.

Also seems similar to some businesses that carp about government intervention and regulations, even descend to diss folks on welfare, resent increases in the minimum wage because it affects their bottom line, yet are the first in line when their business is in trouble asking for a government bailout. But perhaps that's too harsh.

To be philosophical for a moment, a private, free enterprise system based on markets, competition, supply and demand is messy and has proven to be the economic equivalent of democracy, the worst form of government, except for all the others. The quote is attributed to Winston Churchill but it's not his.

As an aside, an original Churchill quote, one that breaks me up:
  • 'The best argument against democracy is a five-minute conversation with the average voter.'
Like all market-based businesses, a private blood system has many freedoms and one is the freedom to fail. To succeed and survive, businesses, including NGOs, must continually eliminate waste, increase efficiency, and offer competitive prices for goods and services.

Even government-funded national blood suppliers like CBS constantly strive to decrease costs. Examples include the
  • Introduction of less well paid 'donor care associates';
  • Consolidation of donor testing and component manufacturing to a few regional centres;
  • Closing a plasma collection clinic because it was cheaper to out-source to the USA.
I wish the US blood system well as it struggle through its cognitive dissonance with upholding a private, market-based free enterprise blood system and realizing that government help in the form of funding is essential for the now dysfunctional system to survive. The market worked as it should for decades, then created a huge Oops!

I chose this ABBA song as a message to the USA to take a chance on a government-based blood system. Guess I think the only causes worth fighting are the hopeless ones.

That's something U.S. will never do, just as they will never adopt universal healthcare system like Canada's even though it's proven to provide better outcomes at much less cost. They made their bed and are doomed to lie in it.
As always comments are most welcome.


Klein HG, Hrouda JC, Epstein JS. Crisis in the sustainability of the U.S. blood system. N Engl J Med 2017 Oct 12; 377:1485-8.

Building a more sustainable U.S. blood system (Rand Corporation, Research Briefs, Nov. 2016)

Mulcahy AW, Kapinos KA, Briscombe B, et al. Toward a sustainable blood supply in the United States: an analysis. Rand Corporation, 21 Nov. 2016.

No comments:

Post a Comment