Supply, capacity, and demand

B lood utilization, in the United States, peaked in 2008 to 2009 at 14.9 million red blood cell (RBC) units transfused. Evidence indicating patient outcomes were similar or improved following “restrictive” transfusion practices and financial considerations led to a 25% or more decline in utilization by 2015 with further decreases anticipated. Patients likely benefit from the emerging therapeutic paradigm with reduced adverse events. Hospitals save blood procurement costs and nursing and laboratory staff time. However, blood suppliers (i.e., blood centers) suffer financially in a mode similar to that affecting the petroleum industry currently and the airline and railroad industries previously: oversupply and falling prices. While consumers benefit from lower prices, those in the affected industry face layoffs, decreased consumable and capital equipment purchases, financial pressure for servicing debt, and reduced budget allocations for innovation. Presumably quality safeguards remain and process improvements expand. Vendors, likewise, face revenue shortfalls and divert investments toward more profitable sectors. Such supply, demand, and capacity issues resonate with US blood suppliers who have reduced blood collections and staffing, employed lean manufacturing practices, and restructured through consolidations, mergers, or acquisitions. Two articles in this issue of TRANSFUSION address the current transition sweeping the US blood system. Nielsen and Nielsen use data envelopment analysis to evaluate the efficiency of 67 community blood centers collecting approximately one-third of the US blood supply. They analyzed inputs (budget, fulland part-time staff, and service population) and outputs (RBC, plasma, and platelet products). Recognizing that the blood centers operate at different scales, they assigned efficiency ratings on the basis of a variable returns to scale model. They calculated constant returns to scale, that is, an increase in input should be matched by a proportional increase in output, and determined returns to scale. Some, but not all, specific circumstances affecting each center entered the model that found only 41% of the studied blood centers were efficient. Overall inefficiency was 20%; a plausible 50% inefficiency reduction would yield $335 million in savings at these organizations. Several centers gained efficiency by reducing their scale. Unfortunately, the study inputs excluded capital costs, did not specify the complexity of specialty services provided by specific blood centers (e.g., extensive RBC genotyping) or whether the center performed or outsourced infectious disease and RBC serologic testing, and did not include the largest centers (e.g., the American Red Cross). Additionally, the authors did not address costs related to surge capacity in the event of a regional or national disaster or investments in innovation at the blood center or vendor level and whether smaller centers could afford capital outlays for modern information technology and new safety-related processes. The authors question whether expansion or mergers could be deleterious from a cost-efficiency point of view, contrary to the practices in process currently. In actuality, the inference identifies moderate size blood centers as less sustainable than smaller ones, likely the result of more complex administrative functions at moderate size centers than those needed at smaller ones with fewer staff. Additionally, the moderate size centers are at a disadvantage to larger centers because they lack scale for distributing overhead and capital equipment costs, that is, resultant higher prices per unit to recover these costs. We see no data regarding larger, consolidated entities, intuitively better situated to interact with increasing mega-sized national healthcare systems and to engage in and benefit from the anticompetitive aspects of oligopolies. Hence, these provocative data and conclusions provide a quantitative target for which blood centers must strive that must be kept in context of the macrofinancial challenges facing US blood collection facilities. The second article, a commentary by McCullough and colleagues, addresses blood system sustainability visa-vis its structure rather than through process efficiency. They question whether new organizational structure such as affiliations, purchasing groups, or partnerships can occur rapidly enough to realign a system in the midst of a storm. In addition, they ask if an altered structure will bring quality or outcome improvements. Perhaps, this question should be the paramount concern. Would the current excess capacity situation have occurred if greater diligence to patient outcomes had been the paradigm previously? In the new “volume to value” era, shouldn’t patient outcomes dictate process and structure; that is, shouldn’t form follow function? The commentary identifies three possible structures for the future US blood system: 1) the current system that they dismiss as unsustainable; 2) a consolidated system of four to six agencies, i.e., oligopolies, that each doi:10.1111/trf.13613