Upstate New York Transplant Services on Friday announced plans to start a new independent blood bank that will sell blood to Buffalo-area hospitals at prices 30 percent less than the American Red Cross.
The as-yet-unnamed blood bank will operate as a part of Transplant Services, 110 Broadway in Buffalo. Like the Red Cross blood donation program, it will include donation centers in the community and mobile blood-donation vehicles.
"We anticipate a $20 million savings for hospitals over the first five years of operation," said Mark Simon, chief executive officer of Transplant Services.
Upstate New York Transplant Services is the region's transplant organ procurement organization.
After personnel, the cost of blood has become the largest recurring expense for hospitals, according to officials involved in the project.
The Red Cross and independent community-based blood centers each supply around 45 percent of the donated blood in the United States, with about 10 percent collected directly by hospitals, according to a federal report.
However, in Upstate New York, the Red Cross has a near monopoly on processing and supplying blood.
In response to cost concerns and a desire to exert more local control over the blood supply, Plattsburgh recently established a community-based blood bank. Health officials in Syracuse considered a similar move before negotiating a new financial arrangement with the Red Cross.
"Local hospitals have been looking for alternatives and answers to the challenge of cost-effective blood supply for many years," said Dr. Margaret Paroski, chairwoman of the Transplant Services board of directors.
Transplant Services will initially partner with the Community Blood Bank of Northwest Pennsylvania until it receives its own license from the Food and Drug Administration to collect, process and send blood to hospitals.
The Erie, Pa.-based group, which will also provide training and technological help, is licensed to operate in New York State, where it serves hospitals in the Southern Tier.
"We're able to offer blood and blood products at a lower cost because we're concentrating on a single community instead of supporting a national model," said Jacky Kocz, executive director.
It's expected the new blood bank will begin operation some time in the first half of 2007.
Simon and others took care not to talk about the project as competition with the Red Cross and instead referred to the effort as a "local, cost-effective alternative."
The success of the new effort will depend on attracting blood donors. Currently, hospitals in the region use 10,000 more units of blood than are collected, officials said.
Representatives of the new blood bank plan to call on local organizations within the next few months to solicit blood donations.
"If people support us, it will work," said Simon.
A representative of the Red Cross could not be reached for comment.