Blood Service lifting prices to beat deficit

The national Blood Service says the prices it charges hospital boards for blood products will rise, and it is looking at "capping" its collection and processing of blood.

The Government has told the Blood Service to change its business operations to break even, rather than run a deficit.

It says it will gear its "production" to levels sufficient to produce enough of a concentrate to counter potentially fatal bleeding in people with haemophilia.

Service chairman Warren Young told the Parliamentary select committee on health that the Blood Service had run at a deficit of just over $3 million last financial year - about $500,000 less than had been budgeted.

Cost-cutting had not been easy because of resistance from district health boards to being charged higher prices for blood products.

"We continue to pursue a fiscal 'break-even' model," Mr Young said.

There would be only a small deficit next year, providing the service could manage changes to its "product mix".

"It is also critically contingent on consultation now under way in the DHB sector to achieve more equitable and sustainable pricing for our services."

The Blood Service, formed from regional blood banks in 1998, had absorbed cost increases without negotiating increases in the prices charged to health boards.

Mr Young said the service also had a high level of borrowing - about 70 per cent of its balance sheet.

Despite this the service was planning to cut this year's deficit of $3 million to about $1.2 million next year.

But the service was having to place a lot of emphasis on balancing its donor collections with demand.

Achieving a balanced budget over three years depended on variables including the management of haemophilia and demand for factor VIII - known as anti-haemophilia factor.

Other important factors included the future role of Biostate - a freeze-dried powdered form of factor VIII - cost increases from the contractor who processed whole blood into different fractions, and the level of price increases charged to health boards.

In the current year, the service was looking at a price increase of 2 per cent.

"But my own view is the service has got a lot of cost-recovery catch-up to be undertaken," Mr Young said, in response to National MP Paul Hutchinson, who asked whether the service was expecting a price increase of more than 4.05 per cent.

Mr Young said there was a "healthy tension" in negotiations with health boards.

For some of the key business lines, particularly factor VIII, rival products could be imported.

Until last year, collection of blood and plasma was largely driven by demand for intravenous immunoglobulin, needed to boost the immune systems of some patients, and this provide enough blood for all the other products.

But this financial year, factor VIII had become the driver. This could add costs of about $500,000 each year through a build-up of stockpiles of unused intravenous immunoglobulin.

To fix the problem, the Blood Service intended to "cap" anti-haemophilia factor product at collection levels sufficient to meet demand for red blood cells - used to treat anaemia and for transfusions after surgery or injury - and intravenous immunoglobulin.

The demand for factor VIII would then be met by re-balancing product lines derived from human plasma and lines produced through synthetic technology.

Donating blood

* Blood supplies need to be continuously replenished because blood lasts only 35 days, and some emergencies require fresh blood.

* New blood donors must be aged between 16 and 60, weigh at least 50kg, not have lived in Britain between January 1980 and December 1996 for more than six months, and not have had a tattoo in the past six months.

* See Monday's print edition of the Herald for details of blood collection in your area.

- NZPA