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Pending merger could trigger another blood-bank 'war'
A second blood war could be on the horizon.
Metro Orlando's major blood bank — called Florida's Blood Centers — appears to have lost out on a bid to buy a smaller blood center in Lakeland, a failure that could mean financial trouble for the $130 million-a-year nonprofit.
The pending merger of the BloodNetUSA in Lakeland with Florida's Blood Services in St. Petersburg could trigger a "blood war" with FBC, experts say. That could result in reduced revenues because the merged banks and FBC might lower blood prices to attract or retain hospitals and medical facilities as customers.
FBC already is fighting a Lauderhill blood bank in several South Florida counties, as well as in Orlando, where its rival now is seeking donations twice a month and intends to greatly expand its services by the end of the year.
It's more bad news for the FBC as a Florida Senate committee is preparing to look into the business practices of the Orlando center and the blood-banking industry statewide. A report is due in December, which could lead to a hearing and new regulations.
FBC spokeswoman Susan Forbes said her agency is committed to working with the Senate Health Regulation Committee, and she confirmed that FBC has been trying to acquire BloodNetUSA.
Bigger blood centers swallowing up smaller ones is becoming more common in the industry. In recent years, the number of major blood banks has dwindled in Florida from about 20 to fewer than 10. The reason: Blood has become a big business.
Like other centers in the state, FBC collects blood given for free by donors, runs it through a series of tests to ensure its purity and then cuts it into different products that are sold to hospitals and medical and research facilities. FBC blood goes for the equivalent of about $310 a pint.
Prices vary throughout the state, but the cost has caught the attention of state Sen. Don Gaetz, R-Fort Walton Beach. He ordered the probe of the industry, in part because he is concerned that blood banks may be colluding to keep prices artificially high.
FBC offered $15 million for BloodNetUSA, which had gross revenues of $19.5 million in 2007, according to Internal Revenue Service records. The money to buy it likely would have been borrowed.
J.B. Gaskins, a Florida Blood Services vice president, said the boards of his bank and the Lakeland operation have agreed to merge. They are awaiting the final documents to sign.
"We've all gone through the due diligence," he said.
No money will be exchanged, he said, just a consolidation of staff and facilities.
"We are disappointed, but also know that in competitive situations, we can't always win," FBC spokeswoman Forbes said.
Consumers likely will see little difference, other than they might be offered more goodies as the centers compete for donations.
Lakeland CEO Alice Barr did not return several phone calls.
Her bank has been troubled since it lost its largest account, Lakeland Regional Medical Center, to St. Petersburg last year. That meant the Lakeland bank had to sell much of its 70,000 pints of blood to other operations that do not have enough supply for its customer base.
Among the Lakeland clients was Orlando, which has struggled to keep up with demand since purchasing a failing blood bank in South Florida for $16 million in 2005.
Gaskins was surprised that FBC was interested in Lakeland.
"I'm not sure what their motive would be to go into Polk County, except to import blood," he said.
He also said FBC officials should not be concerned the St. Petersburg blood bank might try to move into the Orlando market. That is not their intention, he said.
"We've always sort of respected the unwritten territories," Gaskins said.
The CEO of one of Orlando's chief blood-bank rivals, Dr. Charles Rouault, of Community Blood Centers of South Florida, said, "BloodNet merging with FBS in Tampa-St. Pete is a step forward for the citizens of Lakeland as well as the Tampa Bay area. The medical expertise this will bring to Lakeland and the additional blood-collection capabilities of a merged organization benefits everybody involved."
Rouault's bank is gearing up to attract donors and clients in Orlando. He has three $185,000 bloodmobiles on order and is negotiating a lease for space to store the vehicles near the international airport. He also has hired staff to seek out donors.
Such competition is not unusual in the nonprofit world, said Ken Berger, president of Charity Navigator, a New Jersey-based firm that evaluates nonprofits and charities.
"Nonprofits," he said, "can go toe to toe in terms of a sharklike environment."
Dan Tracy can be reached at firstname.lastname@example.org or 407-420-5444.