Thursday, July 7, 2016

If you believe in giving til it hurts, this may hurt

Several readers have bashed me for bashing the American Red Cross. For example, one reader said, ‘What’s wrong with their having 1,359 employees above $100,000 per year? That’s just what it costs to get good people.’
Really? Are you a good person? Tell me, if you really believed the American Red Cross were a noble endeavor, wouldn’t you be willing to work for them for less than $100,000 per year? I would. I think I’m a good person. I’ve been known to work for free for causes I believed in. I could certainly work for a below-market salary if I believed in the work they were doing. As long as it wasn’t their blood business.
The Red Cross is the nation’s largest blood business. Not a business, you say?
  • In 2006, the FDA slapped them with a $4.2 million fine for sloppy screening and testing practices. In their reply, the Red Cross stated “revenue from the sales of blood products will be used to pay the fine.”
  • In 2010, the FDA again fined the Red Cross, this time $16 million, for the continuation of the same issues: failing to properly screen donors, failing to keep proper records of donors and recipients, failure to follow up on infected transfusion recipients and cross-match them with the donors, so that infected donors can be barred from the program, and other defects.
  • In 2012, they were again fined $9.6 million for the same ongoing problem.
Presumably the fine money again came out of the ‘revenue fromsales of blood products.’ Just one of the costs of doingbusiness. Still don't believe they are a business?
According to their website, the Red Cross collects 6.5 million units of blood, free, every year. They sell it to hospitals according to several nationwide polls, for anywhere from $150 to $300 per unit. The Red Cross and other not-for-profit blood businesses claim that money is simply the cost of screening, testing, storage, transportation, and so on, with just a small percentage added on for unexpected losses or emergencies. (A not-for-profit can't very well call that percentage a 'profit,' can they?)
I’ve always been terrible at math, but 6.5 million times $150 per unit seems to be somewhere in the neighborhood of just under a Billion dollars.
That’s a pretty nice neighborhood. However…
Remember the Red Cross official tax return I referenced in my last column? It lists income from “Biomedical Products and Services” which no doubt includes other donated things like transplant organs but is primarily blood sales, as $2,153,870,039.00.
How did they make 2 Billion dollars on 6.5 million units, $1 billion worth, of free blood?
Whole blood is rarely used anymore. Blood can be broken down into its components – red cells, white cells, plasma, and platelets – and the components can be sold for much more than whole blood. According to the National Institutes of Health a unit of platelets, for example, sells for a nationwide average of $533.00. And some fractions, and certain rare blood types, sell for much more than that.
I suspect a lot of those over $100,000 salary employees at the American Red Cross are in their public relations department.
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