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The Challenges of the U.S. Blood Supply Chain

While you may not associate blood with a supply chain, the unique supply chain that delivers blood from donors to recipients is both important and complicated. Blood is unique: it can’t be manufactured and nothing else can supplement it to serve the same purpose. In addition, blood is perishable, with platelets lasting just five days and red blood cells sustaining for 42. Blood is often a life and death matter for trauma care, surgery, medical procedures and therapeutic intervention. As a result of these unique properties, the blood supply chain faces unique challenges across collection, production, inventory and distribution. Challenges include:

Fluctuating Demand

Demand for blood is volatile. Over the past decade, the U.S. has vacillated between surplus and shortage, according to Anna Nagurney, a management professor who specializes in supply chain, on The Conversation. In 2011 after efforts to reduce the units of blood used, the country saw a surplus. In January 2017, a critical winter shortage spurred the American Red Cross to make an emergency call for blood. As the baby boomers age, demand may rise again.

Medical Advances Lower Demand

Advancement in the medical field, such as new drugs or less invasive surgery, has enabled some procedures to use fewer pints of blood for transfusion, overall reducing the need for blood. But the collection and distribution systems have adapted to the change in demand, according to a Rand Corporation study. 

Multiple Opportunities For Waste

Blood can quickly expire, transforming into waste. As a result, the system is vulnerable to any type of delay, miscommunication or procedural lapse that can render the commodity unusable. In other words, there is very little forgiveness in the process. Changes in demand can also result in waste during times of oversupply. Glitches in the collection process, like a missing health history or a deferred donor, can also waste supply.

Increased Competition That Affects Pricing

Like any commodity, organizations that rely on blood (like hospitals) look to cut costs, causing them to sometimes choose lower price options even if it means switching from local blood banks to national organizations like the Red Cross. In turn, this means blood banks strive to cut their costs, often in the form of staffing. 

Heavy Regulations

Many players oversee the blood supply: The U.S. Food and Drug Administration (FDA) regulates the overall system across collection, processing and testing, and The Centers for Disease Control and Prevention (CCD) and the U.S. Biovigilance Network partner to monitor the system as well. Devices and software must also comply with FDA rules, requiring blood collection centers to validate devices in use. 

Donor Dependence

Since blood can’t be manufactured, currently one source is available for supply: donors. This is tricky for several reasons. First, donations are just that – free will, and free of payment, which makes them less reliable. On top of that, blood collection is often overseen by nonprofits. A sudden crisis or disaster, particularly a large scale one, could have the industry scrambling to quickly move blood through the supply chain, and overcoming hurdles like budget or supply deficits can impact overall ability to respond. This is most critical when budgets are tight and supply is low. Donations also need to be regular because blood has a shelf life, but the pool of donors is dwindling, according to the Rand study.

Costly Transit

Blood requires temperature control, with many suppliers shipping platelets with gel packs in controlled temperatures. Insulation and ice or gel packs add to the weight, which increases the cost. Costs also rise in the form of waste, as any delay can render the blood unusable.

Supplier Partnerships

As medical advances have driven demand for blood down, many testing labs and processing facilities have merged or established partnerships that strive to manage the increasing costs of blood banking while also securing safety, availability and affordability.

Hospital Consolidation

A separate phenomenon from partnerships among blood suppliers, many hospitals are also consolidating, making hospital buyers at these mammoth organizations more powerful in negotiations than blood centers. In turn, this lowers prices and cuts profits for blood centers – which are likely already low to begin with.

New Pathogens

New pathogens, like Zika virus, require additional steps in production and testing, also raising costs for suppliers. Usually, these costs aren’t passed on to buyers, according to the Rand study.

The U.S. blood supply chain is rife with uncertainty, as natural disasters, manmade disasters and other unforeseen events affect the demand for blood. Blood banks have to compromise between rising operations costs that spur from regulation and additional testing requirements, and lowering profits from increased competition and minimized negotiation power. Despite these complications, they still cannot compromise on safety or preparedness.  Even in the face of volatility and challenge, maintaining a sustainable blood supply chain is imperative for everyone.

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