Blood Money

Every time you donate, it's money in the pockets of two South Florida companies. Big money.

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 Forties and Fifties 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 Sixties, 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 in the area. 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 the Red Cross, with its national name recognition, would likely move into his turf in Broward County. So Rouault 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 (at that time known as the Palm Beach Blood Bank) would stay within their respective counties.

David Louis and Duncan Anches, ex-employees of South Florida Blood Banks, say their former bosses were bigots and liars interested only in profits
Colby Katz
David Louis and Duncan Anches, ex-employees of South Florida Blood Banks, say their former bosses were bigots and liars interested only in profits

During those years, the two blood banks helped each other 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."

Unconstrained by the agreement, Community Blood Centers began 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 his organization's name from Palm Beach Blood Bank to South Florida Blood Banks.

With its West Palm competitor moving south, Community also needed to expand, so in 1998 it paid the Red Cross two million dollars to take over operations that were still largely confined to 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. That list 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 flaw in the firm's computer system. During a routine inspection, the agency discovered the program that lists 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 Blood Centers officials claim the episode resulted from cost-cutting and an attempt to undercut their 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 2700 people. Lyman claims the Jackson contract will help his company surpass the average 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 per pint to stock its shelves. And a June 7, 2000, letter from Flynn to his employees told them to warn area hospitals that supplies were so low that elective surgeries should be delayed.

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