A Florida Senate committee is launching an investigation into the pricing practices and business connections of the state's blood-bank industry, including Metro Orlando's main blood center.
The inquiry was triggered, in part, by a series of stories in the Orlando Sentinel detailing millions of dollars' worth of business deals between board members of Florida's Blood Centers and the nonprofit agency based in south Orlando.
Sen. Don Gaetz, R-Fort Walton Beach, chairman of the state Health Regulation Committee, said he was "shocked" to learn the cost of blood — the equivalent of $310 a pint — that FBC is charging hospitals and medical facilities.
"The Central Florida blood bank has gained some public attention," Gaetz said, referring to FBC. "We're not going to focus exclusively on them, but we will be inviting them to provide information to us and to answer any questions the committee might have."
A hearing could be held in December, he said, which could be the first step toward a possible bill for the 2010 legislative session. He would not speculate on what type of laws he might be considering.
Added Sen. Andy Gardiner, R-Orlando, a member of Gaetz's committee, "I'm very interested in seeing what the parameters of this would be and taking a look at it."
Gardiner works in the community-relations department of Orlando Health, one of FBC's largest customers.
FBC spokeswoman Susan Forbes said her nonprofit was aware of Gaetz's intentions but had not been contacted by his staff.
"We encourage and support any initiative that can enhance our industry's ability to fulfill its mission," she said.
FBC President Anne Chinoda, in a separate e-mail to the Sentinel, said Wednesday that her agency was putting together its own team to look at the bank's business practices. The decision was made last week, Forbes said.
A memo attached to Chinoda's e-mail noted that the agency has followed the same guidelines for at least 35 years. "While the company has been extremely successful while following those practices, that does not mean that the company's practices are either operationally perfect or in line with the times," the e-mail read.
The agency panel, the memo said, will not include any employees of FBC, only volunteer board members and an independent expert. Recommendations should be ready no later than an April 2010 annual board meeting.
"This is a very important endeavor that could set the course for the company's future," the memo said.
In April, after a Sentinel story about the agency's business dealings, the FBC board reviewed its policies and unanimously decided they were fine. A statement released by FBC board Chairman Leighton Yates said, "This confirms what we have been saying all along."
Gaetz said he was especially interested in the fact that FBC board members routinely sell goods and services to the agency. "Are these less than arm's-length transactions, which then drive up the cost of blood?" Gaetz asked.
Earlier Sentinel stories quoted IRS records that indicate:
•Holland & Knight, the law firm that employs Yates, has been paid more than $1 million by FBC for legal services since 2003.
• Darden Restaurants, represented on the board by a senior vice president, Bradford Richmond, has sold almost $1.6 million worth of restaurant coupons to FBC in each of the past three years. The $10 gift cards cost FBC $5.50 each and are given to donors.
•Orlando-based Eidson Insurance agency has sold nearly $2 million worth of policies to FBC from 2004-06. Its founder is an emeritus board member.
Gaetz has ordered what is called an interim study on the blood industry. There are nine major blood banks in the state, and FBC is the largest, with gross revenues of more than $100 million annually. It operates in 21 Central and South Florida counties, serving 70 clients.
A one-page synopsis of the probe's intentions said there will be a review of the "regulation of blood banks, market competition and pricing of blood products from the perspective of safeguarding the public health and minimizing the opportunities for fraudulent or unwholesome activities in this industry."
The resulting report will set the stage for a hearing of the eight-member Health Regulation Committee.
In addition to the Sentinel articles, Gaetz said, he ordered the probe because he had been contacted by several hospital administrators in the Panhandle who think they are paying too much for blood. They fear the banks might be conspiring to drive down competition in their unofficial service areas.
Gaetz also said he was "surprised" by Chinoda's nearly $600,000 annual compensation package.
"This isn't GM or AIG," he said. "[But] I'm hesitant for the government to dictate executive compensation in nonprofit or for-profit entities."
Dan Tracy can be reached at email@example.com or 407-420-5444.
Follow this story To read all about Florida's Blood Centers, go to OrlandoSentinel.com