Blood Trade

Two companies wage a never-sanguine war for your bodily fluid


Blood transfusions got off to a rather bad start. The first recorded one killed Pope Innocent VIII the same year Columbus stumbled around the Caribbean for the first time. An Oxford physician successfully transferred blood between dogs in 1665, and a Philadelphia doctor made the first person-to-person blood exchange nearly a century later. But it wasn't until the 1940s and '50s that blood banking became popular, as donors lined up to help the war effort. The American Red Cross became the leader of blood banking in major cities, but hospitals and small charities performed the task in still-developing areas like South Florida. In most states, regional leaders developed, making the competitive nature of the business in South Florida unique. Only the competition in the Tampa-St. Petersburg area could compare, with three blood banks battling for four decades; but that rivalry ended six years ago when the bay-area charities merged.

By the 1960s, much of the blood supplied to South Florida hospitals came from charities that paid donors. A large portion of it was given by vagrants and tramps infected with hepatitis and other blood-related diseases. Blood was so tainted with viruses and ailments that blood-borne diseases complicated surgery. Miami's John Elliot Blood Bank, the last of these pay-for-donation organizations, closed in 1980, allowing three charitable organizations -- South Florida Blood Banks, Community Blood Centers, and the American Red Cross South Florida Blood Services -- to take over the supply. Soon, Rouault realized that the Red Cross, with its national name recognition, would likely move into his turf in Broward County. So he brokered a deal in 1982 with his rival, Flynn, to cooperate in fighting the invasion. Flynn and Rouault formed the Gulfstream Regional Blood Program, and with it came the unwritten agreement that Community and South Florida Blood Banks would stay within their respective counties.

Bags of red blood cells, top left, await shipment to hospitals. Above right, sickle cell anemia sufferer Michael Piquion (center) relies on regular transfusions and finds support from his family, including mom Daniella, on his left. Below, the head of Community Blood Centers, Dr. Charles Rouault, gives blood.
Colby Katz
Bags of red blood cells, top left, await shipment to hospitals. Above right, sickle cell anemia sufferer Michael Piquion (center) relies on regular transfusions and finds support from his family, including mom Daniella, on his left. Below, the head of Community Blood Centers, Dr. Charles Rouault, gives blood.

During those years, the blood banks helped each other out when one ran low on blood. To keep prices down, they also ordered supplies in bulk together. The deal lasted eight years, until, Rouault explains, Flynn called him unexpectedly one day and said he was pulling out. "He wanted a divorce," Rouault says. "That's all I know. He never explained why."

Without the agreement, Community Blood Centers started creeping into Palm Beach County. It used the name Palm Beach Community Blood Centers when staging blood drives as a way to appear local. South Florida Blood Banks board member Johansen wrote a letter to Community shortly afterward alleging that the move would "destabilize" the blood supply business. South Florida Blood Banks filed suit over the name in 1992 but agreed to drop the case three years later, when the West Palm firm apparently came up with its own plans to cross enemy lines by sending bloodmobiles into Broward and Miami-Dade. Then, Flynn took a page from his competition's playbook, changing the organization's name from Palm Beach Blood Bank to South Florida Blood Banks.

With its West Palm competitor moving south, Community needed to expand, so in 1998, it paid the Red Cross $2 million to take over operations that were still largely in Miami. With the deal came access to Red Cross testing facilities in Atlanta, which Community still uses, and a donor list that included 100,000 names. The list also became the subject of courtroom debate; former Red Cross employees who were hired by South Florida Blood Banks provided their new employer with a copy. After Community Blood Centers sued South Florida Blood Banks in federal court, U.S. District Judge James Lawrence King ordered the West Palm company to stop using the donor list. King also forbade South Florida Blood Banks from posing as the Red Cross in an effort to steal Community's clients.

In July 1999, not long after South Florida Blood Banks began expanding, the FDA found a serious fault in the firm's computer system. During a routine inspection, the agency discovered that the program listing donors who have previously tested positive for blood-borne diseases was not being properly maintained; at least six problem blood contributors had not been excluded. One man, whose exam had shown hepatitis in February 1998, was allowed to give blood three more times. That blood went into general circulation.

South Florida Blood Banks ordered a recall of its blood and claimed publicly that the donor in question later tested negative for hepatitis. Blood bank officials say the problem was fixed shortly after the FDA issued a stern warning that threatened sanctions. Community officials say the episode resulted from cost-cutting and an attempt to undercut its blood prices. Lyman, speaking for South Florida Blood Banks, declined to discuss specifics of the FDA's warning.

South Florida Blood Banks struck a particularly harsh blow to Community in 1999 by winning the contract to supply Jackson Memorial Hospital, the area's largest blood user. Jackson needs 30,000 pints a year, the equivalent of the blood flowing through 2,700 people. Lyman claims the Jackson contract will help his company surpass the 140,000 pints a year sold by Community Blood Centers.

Indeed, the West Palm company's recent expansion has come so quickly that it has run out of blood during holiday seasons. In 1999, after the Jackson contract was signed, it was forced to pay blood banks elsewhere in the country $90 a pint to fill its shelves. And a June 7, 2000, letter from Flynn to his employees tells them to warn the hospitals that supplies were so low that elective surgeries should be delayed.

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