Monday, December 20, 2010

Snip, snip, the party's over? (Musings on the seductive rise of DNA typing of blood groups)

Updated: 28 Jan. 2017 (Fixed broken links)
December's blog's title comes from
  • A song by Willie Nelson: The party's over
  • Single-nucleotide polymorphism or SNP (pronounced snip), the basis of most blood group DNA typing. Simply put, a SNP is a DNA sequence variation that occurs when a single nucleotide in the genome differs between members of a species or paired chromosomes in an individual.
The use of seductive is tongue in cheek. Not sure if I mean 'harmful but enticing'. Perhaps insidious would be apter, i.e., 'developing so gradually as to be well established before becoming apparent'?

The blog discusses
  • Increasingly cozy relationship between TM professionals and the biotechnology industry;
  • Molecular typing of blood groups and its uses;
  • What DNA typing potentially means for the TM laboratory's work force;
  • A futuristic farce on where all this might lead.

The idea for this blog came from these sources:
  1. Announcement in the AABB Weekly Report (17 Dec. 2010) of a new section in Transfusion devoted to blood group genomics with Connie Westhoff, currently director of genomics and immunohematology at the New York Blood Center, as the section's associate editor.
  2. DNA typing resonated because a recent blog (Aug. 2010) discussed Immucor' s investment in DNA typing, specifically its purchase of Bioarray Solutions in Aug. 2008: Goldfinger's filings, a customer's toolkit (Musings on business intelligence) and Immucor's belief that "molecular immunohematology will revolutionize blood bank operations."
  3. By chance, in researching a case study, I had just read two articles on molecular typing, one co-authored by Westhoff:
Westhoff CM, Sloan SR. Molecular genotyping in transfusion medicine. Clin Chem 2008;54(12): 1948-50.
Reid ME. Transfusion in the age of molecular diagnostics. Hematology 2009.

FYI: Marion Reid, a legend at the New York Blood Center and recipient of the 2006 International Woman in Transfusion Award.
Interestingly, the Westhoff and Reid papers above list author involvement with Bioarray Solutions (and its earlier name, Bioarray), a company whose products DNA type red cell and HLA antigens.
Westhoff and Sloan paper's disclosure of potential conflicts of interests:Consultant or Advisory Role: C.M. Westhoff, BioArray, Ltd. and Immucor Inc. S.R. Sloan, Bioarray Solutions.

Reid paper's conflict-of-interest disclosure: The author receives research funding and royalties from patents from BioArray Solutions.
As evidenced by these examples, world class TM professionals often advise biotechnology companies and Bioarray Solutions has its share of respected advisors. Besides the three already mentioned, I came across others. It's accepted that industry needs input from professionals and the practice is common.

Of note, industry financing involving direct and indirect payment (consulting, food, travel, product samples, you name it) is estimated as high as $29 billion/year.

Questions to ponder:
  • Could consulting for a biotech firm, presumably for a fee, influence a person's perspective towards the technology in general?
  • How about earning royalties for a patent used by the company?
  • Could association with a company, current or past, influence a person in a role as editor of a journal section specifically dealing with research and developments in the company's field?
What happens when respected, leading experts, individuals who are the targetted clients of a particulate technology, also advise the companies as consultants and later serve as gate keepers of peer review for what is often company-sponsored research?

My gut tells me that something could happen, despite the obvious integrity of those involved. Arrangements, many of which are not transparent, seem too cosy to generate confidence in the system.

Can anything be done? Perhaps not. 

To quote from Immucor's 2010 SEC Form 10-K report in discussing Bioarray Solution's DNA technology:
"In many countries, blood pre-transfusion testing is limited to the prevention of transfusion reactions and not for the prevention of alloimmunization, which occurs when antigens foreign to the patient are inadvertently introduced into the patient’s blood system through transfusions. If alloimmunization occurs, the patient develops new antibodies in response to the foreign antigens, thereby complicating future transfusions.
By using multiplex, cost-effective molecular testing, our molecular technology allows testing to prevent alloimmunization for better patient care."
Not unsurprisingly Immucor focuses on preventing alloimmunization, as this use would considerably expand profits. As I noted in the earlier blog: "In a consumer society, if a real need does not exist, companies try to create one."

So what are the legitimate uses of molecular typing to determine blood groups?

Scenarios where DNA typing could prove useful include these scenarios (see Further Reading for more details of each scenario):

1. Recently transfused patients with unexpected antibodies who have two red cell populations.

2. Patients with a positive direct antiglobulin test where available typing antisera reacts only by the indirect antiglobulin test.

3. Fathers of infants carried by Rh negative woman with anti-D where the father is Rh positive.
DNA typing the father for the RhD gene can determine homo- or heterozygosity for D and indicate if the fetus is definitely D+ and should be monitored.
If being D-negative is possible, the fetus should be Rh typed using fetal DNA from cells obtained by amniocentesis or by testing cell-free, fetal-derived DNA in maternal plasma.

If the fetus is Rh negative, mother and fetus do not need to be monitored.
4. Pregnant women who appear to be weak D, in order to differentiate between weak D and partial D, since usually only the latter can make anti-D. Potentially, Rh immune globulin could be given only to females with a D variant who are partial D.

5. Extended phenotype matching of donor blood for patients with sickle cell disease.

The above scenarios are not exactly pressing. Many situations have work-arounds or present limited safety risks to patients. Granted they offer useful adjuncts to serologic testing.

As to the nuts and bolts of pretransfusion compatibility testing, routine ABO and Rh typing do not warrant molecular methods, nor does preventing alloimmunization in general as Immucor would have its investors believe.

Although molecular methods for typing red cell antigens are available in some locations, today the technology is mainly used by reference laboratories to supplement traditional serologic typing methods done 'in the trenches'.

Despite good progress, significant practical and scientific limitations remain and the issues are complex, as discussed in the papers in Further Reading. Seltsama and Doescher cover the scientific issues extensively. The 'high-throughput platforms' mentioned by adherents are not quite ready for prime time live in your neighbourhood blood centre and transfusion service.

Thus, work force effects will not be snip-snip, where SNIP is defined as
  • To cut, clip, or separate with short, quick strokes
Rather the SNP cut will be long and slow before staff hemorrhaging begins. But begin it will.

All TM laboratory professionals know that serology is in its last gasps. This is shown by the paucity of immunohematology papers in journals such as Transfusion. For example, December's issue has two and neither deals with red cells.

Rest assured that once 'high-throughput platforms' become widely available for molecular typing, regardless of whether sound scientific rationales exist, antigen phenotyping of all kinds will be taken over by molecular methods. It's simply too seductive, especially with so many TM leaders on side with the program.

As with automation, vendors will justify initial costs or high ongoing maintenance and supply charges (if a 'razor and blade' business model is chosen) with the promise of "reduced headcounts"  -  eliminating jobs for people in the community in favour of sending money to commercial enterprises elsewhere, where corporate profits are the main concern.

Seeing as it's the festive season, let's peek into a futuristic world populated by sugar plum fairies. I've mined some stereotypes (hope they bring a chuckle) and all is written with warm goodwill.

Here's the premise. What if companies pushing automation, other high throughput instruments, and information systems to support them have their way and almost every transfusion service laboratory job is eliminated?

In such a fairyland:

DNA typing platforms will match patients with donors for all major blood group antigens and pretransfusion serologic tests will become redundant.

Labs will be staffed by inexpensive 'multi-skilled workers' with no formal qualifications, all supervised by technical specialists (perhaps one per shift) now in a 'leadership role better aligned with their skills'.

Lab technologists / scientists will be free to take a buyout, a generous offer of $100 per year worked. They will, however, be forced to hawk their collection of syringes and tourniquets on street corners to finance a nursing education, which they can now consider since nurses no longer have much patient contact.

Since gowns became de rigeur for personal protection in the lab, they will sport white lab coats and happily be mistaken for physicians who have long claimed the lab coat as their uniform of record despite most never having set foot in a lab (too dark and dingy down in those basements). 

On the clinical side, other technology (bar code scanners, RFID, and the like) will ensure positive patient and donor unit identification. Smiling robots will administer blood transfusions, leaving nurses free to rant about newbie residents and those nitpicking idiots in the lab, have wild sex in the closets, and fantasize about Nurse Jackie one day killing Dr. House.

Yet more technology in the form of biosensors implanted in patients will decide when blood transfusion is warranted using programmed best practice guidelines, determine which components are needed, measure their effectiveness post-transfusion, and communicate all via wifi to a central information system nicknamed Big Bro (BB for short).

TS medical directors will sit in their offices playing on iPads with100s of fun apps all tailored to what Gregory House would be like as a hematologist versus a hematopathologist.
  • On breaks, the wunderkind millennials will tweet each other about how to pay off student loans before retiring.
  • About-to-retire boomers will obsess about stock portfolios.
  • Late Generation Xers will text about how, if they hear once more how great the Beatles and 1960s were, they will throttle their parents.
In the absence of sugar plum fairies, when reduced serologic antigen phenotyping eventually occurs, the serologic mainstays will remain as they are now, antibody detection and identification. Thank goodness for the immune response. The party's not quite over...."These are still the days, my friends".
Have a well deserved, fun-filled and relaxing holiday season with friends and family. And may the farce be with you....


Reid ME. The Rh antigen D: a review for clinicians. Blood Bulletin 2008 Apr; 10(1).

Reid ME. Transfusion in the age of molecular diagnostics. Hematology 2009.

Seltsama A, Doescherb A. Sequence-based typing of human blood groups. Transfus Med Hemother. 2009; 36(3): 204–212. Published online 2009 May 14.

Westhoff CM, Sloan SR. Molecular genotyping in transfusion medicine. Clin Chem 2008;54(12): 1948.

As always the views are mine alone. Comments are most welcome BUT, due to excessive spam, please e-mail me personally or use the address in the newsletter notice. 

Tuesday, November 23, 2010

OneMatch, one love - Do you believe in love? (Musings on stem cell & organ donation)

This blog is about the fast approaching so-called 'season of giving' and what we do give vs could give. The title comes from a mix of CBS's OneMatch program and songs by Bob Marley & Cher.

The blog has multiple origins (resources featured in TraQ's monthly newsletter):

Naturally, you're probably thinking, "Oh no, this is going to be a kumbaya feel-good and terminally boring blog. Believe it or not, at a national TM conference in Vancouver a few years ago, after giving a talk on the benefits of sharing TM resources, I invited colleagues on stage to sing this 60s song to the amusement of attendees, not necessarily the buddies I coerced on stage.

Well, if you are thinking the blog is feel-good pap, you are wrong. The blog is not going to stretch the envelope by alluding to the salaries of TM executives and risk alienating colleagues, but it is going to be relatively short and not particularly sweet.

Show me the money
Let's begin with how much money you are going to spend for the coming holidays:

  • Does your workplace have a gift exchange where you buy each other inexpensive 'giftoids' (maximum $10 or $20) that you struggle to make as untacky as possible?
  • Will you travel to ski on slopes covered with powder snow or to lie in the sun on white sand beside a blue-green ocean?
  • Will your friends and relatives get gifts they can live without?
  • Some or all of the above?
Here's an alternative. This holiday season, why not resolve to give someone a gift that they cannot live without? More specifically:
  • Your organs when you die - and most of us never know when
  • An organ, or part of one you can spare, while alive
  • The easiest gift of all, your stem cells
As a fall back, you can always donate blood. That's good, but you can do so much more.

  1. Instead of a gift exchange at work, hold a blood drive challenge or stem cell sign-up and see who donates or registers more ('oldies' vs under 45s; XYs vs XXs; etc.)
  2. Take the plunge and sign up to be a stem cell donor. In Canada, register at OneMatch; in the UK, British Bone Marrow Registry; in Australia, ABMDR; in New Zealand, NZBMDR; in USA, NMDP.
  3. No matter where you live, watch this CBS video with your family, friends, or co-workers. Hear Shamir and OneMatch staff explain it all (~9 mins well spent - you probably spend more time on a toilet break)
Think you know it all? Just how knowledgeable are you?


No matter where you live, you can:
  • Specify organ donations in your will;
  • Discuss the donating issues and your wishes with your family so they don't cop out when the time comes and they are grieving;
  • Become a stem cell donor while alive and an organ donor when you die.
Let's face it. If you are a TM health professional, you and your family likely have a lot and you may have heard of this biblical verse (paraphrased):
  • To whom much is given, much shall be required. -- Luke 12:48
By joining a stem cell registry, you could be THE ONE - a donor who saves the life of a fellow human being anywhere in the world. Most registries are networked.

If you are too old or have health issues that disqualify you, why not talk to your children and grandkids about becoming stem cell and organ donors?

Of course, you could do nothing and celebrate the holidays as usual.

But why not show those you care about - and yourself - who you really are? Cut the rationalization crap and JUST DO IT!

Now for the songs in the blog's title....

  • One love (wonderful video of Bob Marley's classic)
  • Believe (Cher in 1998 at age 52 - one of the best selling singles of all time - Get your dancing shoes on!)
And if you think the blog was too sweet after all, see
  • Kumbaya (What many consider a cliche, sung by Joan Baez, one of my heroes from the 60s, and a fabulous voice even if you lean towards the bubba and redneck end of the political spectrum)
As always the views are mine alone. Comments are most welcome BUT, due to excessive spam, please e-mail me personally or use the address in the newsletter notice. 

Saturday, October 23, 2010

'Get back' Jo Jo (Musings on cognitive dissonance)

This blog is about competing blood safety standards and a current conflict that caused me to muse on cognitive dissonance. The title comes from a catchy 1969 Beatles song with silly lyrics.

Cognitive dissonance (CD) is a fascinating thing. I've experienced it several times over the years, ie., the uncomfortable mental conflict that arises when holding incongruous beliefs simultaneously. An example is the conflict that many nicotine addicts feel knowing that smoking is bad for them, yet at the same time managing to convince themselves that it is not that bad, even believing it is "good" for them in some ways (e.g., helps to cope with stress, fit in with peers, etc.)

Currently I'm experiencing CD that started with the
The letter requests a meeting to discuss AABB's concern about TJC's creation of a separate set of blood standards for hospitals. Excerpts:

"AABB was both surprised and dismayed to see that The Joint Commission has determined not to incorporate AABB standards into its most recent proposed standards, but rather to draft a separate set of blood standards applicable to hospitals accredited under The Joint Commission's laboratory accreditation program."

"We do strongly believe that the proliferation of overlapping, but potentially divergent, standards for transfusion services and blood banks is a disservice to hospitals and will actually decrease patient safety as hospitals work to adhere to two separate sets of standards. Further, the time and resources that will be required to ensure that the proposed standards do accurately reflect AABB standards, now, and in the future, are significant."
As mentioned in the letter, AABB standards have existed since 1958 and are widely adopted within the USA and worldwide. I do not know why TJC decided to set up another set of blood standards that do not incorporate AABB standards. The US blood bank community already has an array of compulsory government regulators and voluntary accrediting bodies, including FDA / CBER, AABB, CAP, FACT, and TJC.

That said, regarding the new TJC regulations and their impact on hospital laboratories, AABB-accredited or not, I have no idea about the range of opinions that may exist within the USA. Nor will I wade into the morass of competing blood standards and regulations in the US.

Instead, this blog muses on the cognitive dissonance that unexpectedly occurred after reading the AABB's TJC letter.
For those who do not know, TJC operates accreditation programs for a fee to subscriber hospitals and other health care organizations (> 17,000). Most state governments recognize TJC accreditation as a condition of licensure and Medicaid (health program for low income individuals / families) reimbursement. Like all voluntary accrediting organizations, AABB also charges users for its inspection and accreditation services.
The two competing thoughts:

  • Thought "A": AABB standards are exemplary and, of course, AABB is right in saying, "What the hey! Slow down and reconsider these new TJC standards. This is nuts and could harm patients!" They said it more respectfully, of course, but that's the core message.
  • Thought "B": Yes, all that's true, but AABB has a big investment in its standards and a vested interest in preventing anything that threatens to undermine their primacy. Many of its activities revolve around standards, especially the standards and associated accreditation activities, as well as AABB Consulting
Indeed, standards are arguably the AABB's prime line of business, more important than its role as a professional association. The AABB standards are its main brand. Think of AABB and what do you think of? Standards. If American, think of blood safety standards and what comes to mind? The AABB. Even its mission statement incorporates the term standards:
  • AABB advances the practice and standards of transfusion medicine and cellular therapies to optimize patient and donor care and safety.
In a nutshell:

  • Thought A: AABB is clearly right and has the moral high ground because it's fighting for patient safety.
  • Thought B: AABB is motivated by self-interest and fighting for survival of its main business line.
What to do with the cognitive dissonance that arises? CD theory proposes many ways to reduce CD. Dilbert has several CD-related beauties:
The coping mechanisms in the Dilbert cartoons are discussed in

So, let's see. I could reduce dissonance by thinking as follows (a few examples, some tongue in cheek):
  • "AABB may be motivated by self interest, but it does such good work, I don't care."
  • "TJC is out of line, dead wrong." (I don't know TJC's rationales and would like to hear its viewpoint first.)
  • "AABB does good work. But what it proposes is in its self interest and has to be taken with a huge grain of salt."
  • "TJC is a good organization. It must know what it's doing. I just don't know what the justification is yet."
  • "AABB has jumped at the chance to accredit everything going. It wants to dominate the TM standards world, evidenced by removal of 'American' and 'blood banks' from the name. They are power hungry and will fight to the last standard standing."
For now, the questions remain. Which position is closest to the truth? Who cares? Should we all care?


Interestingly, for years the Canadian Society for Transfusion Medicine has produced
In 2004 the Canadian Standards Association came out with a new set of blood standards, revised in 2010:
This resulted in the need for CSTM to revise its standards to incorporate CSA standards. So with TJC and AABB, some aspects seems like deja vu all over again (to quote Yogi Berra).

At the time I wrote about the impact on hospital transfusion services:


  • "While regulations and standards share many similarities, they differ in one fundamental respect: regulations apply standards through the force of law and provide penalties for noncompliance. Standards, in and of themselves, are never legislative tools. To have the force of law, standards must be incorporated into the regulations.
  • Health Canada is currently developing new regulations specific to blood and blood components intended for transfusion under the Food and Drugs Act. Health Canada will use CSA Standards as one of several tools employed to develop new federal regulations for blood and blood components. Based on the Standards, a goal of the proposed regulations is to outline clear and intelligible requirements, allowing for timely updating as new technologies / products / issues emerge, and achieving greater harmonization in Canada related to blood collection, handling and post-market surveillance.
  • A review of Z902-04 is currently underway [ by Health Canada] to determine which parts can be referenced in the new regulations. Some sections of the standards fall outside of Health Canada’s jurisdiction and will not be referenced in the new regulations."
  • Since the 2004 article was written, CSA Z902-04 has come and gone, replaced by CSA Z902-10, and still no regulations for hospital transfusion services have materialized from Health Canada.
  • CSTM is a relatively small organization yet has had to invest much time and energy to revise CSTM Standards for Hospital Transfusion Services to comply with CSA Z902-10.
Where does all this leave organizations that had been using CSTM Standards? Where does it leave the CSTM Standards?


In the USA, AABB is 'dismayed' that TJC chose not to incorporate AABB standards into its most recent proposed standards and strongly believes that proliferation of overlapping, potentially divergent, blood standards is a disservice to hospitals and will decrease patient safety.
  • Is AABB clearly right? Does it have the moral high ground because it's fighting for patient safety?
  • Or is AABB motivated by self-interest and fighting for survival of its main business line?
  • Are both statements true?
  • Does any of this matter?
Readers can decide for themselves. Perhaps the issues will become clearer as events unfold.

But it's obvious that anyone with AABB accreditation (nearly 2000 institutions, the vast majority in the USA, and no doubt including all of the large transfusion service laboratories) - and any institution thinking of becoming accredited - would be unhappy to say the least. If unchanged, TJC's action will cost AABB-accredited institutions time and energy that could be better spent elsewhere.

In the meantime, the song that comes to mind is this irreverent Beatle ditty, sung here by Paul McCartney in live performance:
Maybe The Joint Commission ('Jo Jo') should get back to where it once belonged?

And for a fun change of pace, since summer has come to an end, at least in my corner of the globe, from André Rieu's 2004 concert in Cortona, Tuscany, a lovely version of

  • The Rose (Carmen Monarca, Carla Malfioletti, and Suzan Erens)
As always, the views are mine alone. Comments are most welcome BUT, due to excessive spam, please e-mail me personally or use the address in the newsletter notice. 

Sunday, September 26, 2010

Take this job and shove it (Musings on process efficiencies in the blood system)

This blog was motivated by annual reports for Canada and Ireland's national blood suppliers included in TraQ's September newsletter:
Both reports emphasize the need for ongoing cost efficiencies. As well, TraQ's August newsletter featured cost savings in the UK NHSBT due to reorganization that decreased the number of testing and processing centres.

The blog's tongue-in-cheek title derives from the old Johhny Paycheck hit:

Before beginning, allow me to digress briefly and explain how the blog's monthly topics come about:

1. It's usually a last minute thing, during which inspiration comes (or not).

2. Besides current relevance, my main concern is to appeal to as many TM professionals as possible. This means that at least one aspect of each blog should be meaningful to all who work in TM, regardless of profession, e.g., serologic issues, no matter how fascinating to me as a lab technologist, are out.

3. Taking a contrarian view that goes against current established dogma is in. Everyone should have their beliefs challenged now and then.

4. Perspectives cannot be so controversial as to alienate cherished friends and colleagues. It's a tricky judgement call (see addendum below).

That said, this blog's topic focuses on how CBS (Canada's national blood supplier) treats cost savings in its latest annual report, specifically how it stresses process efficiencies that result in a decrease in "the number of labour hours" (i.e., staff reductions). I could have written about other aspects of the report such as the self-congratulatory tone typically pervasive in such documents, but what fun would that be? <8-)

How does the CBS report relate to you, given that you are probably (i) not Canadian and (ii) not a CBS employee? Some possibilities:
  • It may amuse you to see how saving people's lives via transfusion has become so business-oriented.
  • If you are employed as a TM professional in any capacity, learning how one employer views process efficiencies, and what achieving them usually means, may apply to your situation now or in the future.
  • There are interesting data on staffing and other costs that you can compare with costs in your own country.

The quotations come from CBS's 2009/2010 annual report

First, some musings on language. This year's report is called the "Annual Checkup" and extends the medical analogy with headings such as "healthy results"; "vital signs"; and "We're making surgical decisions" in its introduction. Most Canadians, if they read the report at all, are unlikely to make it past the 'cutesy' introduction apparently targetted to the public, not TM professionals.

Thereafter, the report takes on a distinctly business perspective and is replete with business jargon. Examples (my comments in brackets):
  • This financial report includes forward-looking statements. (Statements based on assumptions and projections that may not occur, made in the interest of transparency and butt-protecting so that investors do not unduly rely on expectations of a company's success)
  • CBS "operates four lines of business"....(An internal business unit, i.e., their main business activities)
  • There are threee "major drivers that impact our budgetary environment" (Cost driver = term associated with activity-based accounting: any factor that causes a change in the cost of an activity) (Gotta' love the bureaucratese: budgetary environment = budget).
  • The organization’s liquidity is largely affected by the timing of funds received. (Liquidity = ability and ease of an asset to be converted into cash quickly.)
  • Regarding purchase of plasma protein products from Canadian and international suppliers, which result in cost fluctuations due to changing exchange rates: "To manage costs more effectively we continue to hedge a portion of our currency requirements." (Hedge = An investment position taken to protect investors from the risk of an unfavorable price change.)
All of these terms stimulate musings on CBS as a business attempting to achieve ever more cost efficiencies. Since Canadians fund CBS through provincial and territorial governments, in a way Canadians are all shareholders, albeit indirect, non-voting ones and shareholders have the chance to question financial reports.

As background, the CBS report includes these tidbits on staff costs (paraphrased):

  • Staff costs make up ~59% of total 'transfusable products' expenses (components collected, tested, prepared by CBS)
  • Staff costs increased 0.9% (compared to 4.9% in the prior year)
  • Further efficiencies will come from more process efficiencies, i.e., the number of labour hours required to collect, test, manufacture and ship products will decrease.
As a shareholder, it would be interesting to see the average percentage increase in staffing costs for the 75% of CBS's unionized staff (clerical, laboratory, facility maintenance, IT, transportation, nursing), compared to non-unionized staff (managerial, medical, legal, and executive). Of course, since both staff groups are diverse, it may make more sense to provide a detailed analysis of staffing cost increases.

For example, on average costs for "group A" increased by x%, for "group B" by x%, etc. Even though there are significant differences between staff in any one category, thinking as a shareholder, such a breakdown could be informative.

Since its creation in 1998, transparency has been a key CBS goal. The report states that

  • Staff costs constitute a significant expense and is influenced by product demand and collective agreement obligations and goes on to note:
  • "While it is difficult to influence our labour rates (nearly 75% of our workforce is unionized) and demand for our products, we do have the ability to improve our process efficiency."
But what about the 25% of staff who are non-unionized? Since the report brings up the unionized workforce in the context of cost efficiencies - by CBS's own logic - the 25% of its non-unionized staff could be a open to cost scrutiny, yet no mention is made of it in the report. Although there are fewer of them, one quarter is not insignificant. (I know, I could have used significant but not insignificant is used as a litote.)

Addendum (28 Sept. 2010): I've had feedback on the blog since it was written and would like to clarify that the blog's discussion questions the reasoning behind the following statement from the CBS report and is not meant as a comment on anyone's compensation: "While it is difficult to influence our labour rates (nearly 75% of our workforce is unionized) and demand for our products, we do have the ability to improve our process efficiency." I have also altered some examples that may have suggested otherwise. Thanks to those who took the time to write.

As an aside, the Internet has all kinds of unexpected information. Just like contracts for unionized staff that outline salaries and negotiated increases (available on union/association websites), many of the salaries of non-unionized CBS national staff are publicly available on provincial government websites if you know where to look.
The first time I saw my fees as a contracted supplier of services on a health region's website, I flipped, thinking (incorrectly) that the information was private. The applicable freedom of information and protection of privacy act states,
  • A disclosure of personal information is not an unreasonable invasion of a third party's personal privacy if the information is about the third party's position, functions or remuneration as an officer, employee or member of a public body or as a member of a minister's staff.
Process efficiencies also include such strategies as CBS's proposed Donor Care Associate role:
  • "... multi-skilled workers will work in blood donor clinics to assess donor eligibility. Nurses will continue to be present in all our clinics, in leadership roles better aligned with their skills."
This approach (known as de-skilling) aims to replace health professionals (nurses) with less well skilled workers who can be paid less. It fits with strategies such as outsourcing as an attempt to pay less for workers, but only those on the front-lines in the trenches.


Just as cost efficiencies should apply to all staff and even executives should be fair game for cost-cutting, so should demand for products. Influencing product demand is no simple task (another litote) and time intensive, but CBS has a mandate to help educate health professionals "to ensure our blood products are used wisely".

CBS educational efforts are extensive and include
Although mentioned in the report, why did the report not more directly link existing and future educational efforts to potential cost efficiencies, instead of the almost sole emphasis given to process efficiencies (de facto synonymous with reductions of staff in the trenches)?

The report makes it seem that product demand is 'what it is' and cannot be affected.
  • Is it because process efficiencies that reduce staffing needs are quicker and easier to achieve than physician education on blood utilization (no doubt true)?
  • Does it reflect a mind-set and corporate culture that equates savings with reductions in staff costs because staffing typically accounts for so much of the budget?
  • Is it because Lean and the concept of staff optimization (cousin of right-sizing, ubiquitous in the 90s, generally resulting in staff reductions) is the new religion?
Such thinking, once entrenched, often discourages creative problem solving that goes against or falls outside current dogma. Who wants to question those in power, often a career limiting move?

Regardless of the cause, more emphasis in the report on educational efforts to reduce demand and promote better blood utilization seem appropriate, given that
  • Blood components and plasma derivatives are regularly transfused inappropriately (a huge waste that potentially threatens patient safety)
  • Plasma protein products such as IVIG and albumin (as a 'business line') account for the largest percentage of CBS's expenses (48.2% compared to 45.6% for fresh blood components) and costs increased by 14.7% in 2009-2010.
Highlighting the fact that reducing product demand is achievable and will result in cost savings would also validate the too often unsung efforts of CBS staff who go the extra mile to educate colleagues on effective blood usage and best practices.

Just for fun, enjoy Dolly Parton's mega-hit, Nine to Five

As always, I alone am responsible for the blog's content. Comments are most welcome BUT, due to excessive spam, please e-mail me personally or use the address in the newsletter notice. 

Thursday, August 26, 2010

Goldfinger's filings, a customer's toolkit (Musings on business intelligence)

Updated: 28 Jan. 2017 (Fixed broken links)
This blog's thesis is only slightly tongue in cheek but its title definitively is. The title derives from the ubiquitous toolkits currently found everywhere in transfusion practice, and the 1964 James Bond movie, Goldfinger in which the eponymous character is obsessed with gold, much like private companies are focussed on profits, albeit not usually with the same gleeful fervour as a sinister villain.

As an aside, Goldfinger has special memories for me because I saw the film in Tel Aviv, Israel in 1965. We had to buy tickets ahead of time (none sold at the door) and catch much of the dialogue by reading the French sub-titles (goodness knows why) due to the uproarious cheering of the audience at every Sean Connery feat. We were told that television was only on for a few hours each day and movies were incredibly popular.
By happenstance I came across the SEC Form 10-K Annual report for Immucor, a blood industry supplier of automated instruments and reagents. The Form 10-K reports, which public companies file with the U.S. Securities and Exchange Commission, offer comprehensive business overviews of a registrant's business, such as history, competitors, risk factors, legal proceedings.

Now before your eyes glaze over, if you work in the blood system in any capacity, I highly recommend that you take a peek at these fascinating reports. In a way, it's akin to industrial espionage, i.e., gaining access to information about a company’s plans, products, clients, and trade secrets in order to gain insights and predict their actions, including marketing strategies and sales pitches.

Normally it's competitors who engage in industrial espionage, but if you buy a company's products and services, you can potentially use the information to your advantage. Spying is illegal if the information is private but, since the SEC records are public, it's all above board and fair game.

Donning our sleuth caps, let's examine just a few aspects of the business intelligence that's publicly available in Immucor's July 2010 SEC filing and how it can be used to advantage by potential clients.

The specific information is most relevant to those in the lab but the lessons can be applied to dealing with any sales representative and related marketing, advertising, and selling strategies targetted to your profession.

Immucor's SEC 10-K report merely serves as an example. To all my sales rep friends and colleagues, as they say in the Godfather films, "It's not personal. It's strictly business."

Reality is that companies spend considerable time and effort getting to know potential customers and understand their likes, dislikes, wants and needs. Think of those free wine and cheese parties, dinners, and tour-the-bay cruises you've attended at conferences. They weren't just to create goodwill. Similarly, customers can benefit from knowing how companies think and what tools they will probably use to get you to buy.

Here's a mini-toolkit to get you started. Quoted text is from Immucor's SEC Form 10-K report (23 July 2010).


"Our strategy is to drive automation in the blood bank."


Obviously, automation must be strongly promoted, since it is in Immucor's interest to sell its instruments and automated ("capture") reagents. As mentioned in an earlier blog, the latter have one of the highest gross profit margins in the industry, 80.2% in Immucor's 3rd quarter for 2010.

From a client's perspective, profits in the range of 80% may seem excessive. But profits are the primary purpose of private enterprises. From the company's perspective, the higher the profit the more they will be able to
  • pay shareholders
  • raise additional financing
  • survive in hard times
  • invest in R&D that can develop new products and lead to continued or increased profits.
However, to drive automation and increase profit, automation must be seen not as a way to increase profits, but as a way for clients to save money while improving safety.

Hence the comapany's sales pitch:

"We believe our customers...benefit from automation. Automation can allow customers to reduce headcount as well as overtime in the blood bank, which can be a benefit given the current shortage of qualified blood bank technologists.

We also believe that automation can improve patient safety, can increase operational efficiency and, for customers such as integrated delivery networks with multiple blood banks, can permit the standardization of best practices.

For Immucor, automation allows us to gain market share and secure a long-term, contractual relationship with our customers."


On the safety issue, while it may be true (or not), is there published evidence to support a decrease in life-threatening errors and resultant increase in patient safety after Immucor's automated instruments have been introduced in the transfusion service?

Don't ya' love "reduce headcount," an euphemism for eliminate staff, and interesting that it merits first place ahead of "improve patient safety."

About the "current shortage of qualified blood bank technologists", this largely happened because restructuring and regionalization with associated automation led to fewer jobs, which in turn led to closures of medical technology schools. Concurrently, at least in Canada, nurse and physician education programs were also decimated.

In Canada, in response to increased demand, more technologists (nurses and doctors) are now being trained, but a significant number of jobs for technology graduates continue to be part-time.

In a way, automation contributed to a shortage of "qualified blood bank technologists" and now automation is being promoted as a solution to the shortage. Say what?

Fact is that automation allows for less trained staff to perform routine work in the transfusion service and leads to fewer blood bank specialists. Isn't it having it both ways to say that automation now solves the problem that it intrinsically helped create?

In the past, I recall that Immucor promoted its automated instruments to transfusion services as a way to save ~1.5 staff members and to allow remaining staff to concentrate on more 'important stuff' for thinking technologists (i.e., humans) such as identifying antibodies.

In today's economic climate, I imagine that cost saving is still the main mantra of the sales reps, with patient safety tossed in as a 'feel good' justification for eliminating jobs.

With automation, it's worth considering what is actually happening, i.e, a transfer of money from people (staff) residing in a community (people who pay taxes, buy houses, shop and support local businesses, and contribute to community life) to generating profits for a large corporation situated elsewhere. Does this benefit society in the long run? Complicated question but I sometimes wonder.

Obviously those considering automation need to extensively analyse multiple factors between competitors such as
  • initial capital costs
  • ongoing maintenance and reagent costs
  • sensitivity and specificity (as applicable)
  • ease of use
  • ease of transition and implementation (impact on other processes & procedures)
  • redesign of physical layout, etc.
  • training requirements, and more
Potential clients should also consider Immucor's huge gross profit margins when negotiating reagent contracts. And it's worth remembering that those long-term contracts for reagents are where the money is. From the NEC submission:

"As of May 31, 2010, we had an instrument backlog of approximately 179 Echos and 43 Galileo/NEOs. This backlog represents instrument orders that have been received but the instruments have either not been installed or the customer validation process has not been completed.

As such, the instruments are not generating recurring reagent revenue at their expected annualized run rates. ....we had not recognized approximately $16.7 million in deferred revenue from instrument sales contracts that had reagent price protection and from extended warranty sales."

Note that Immucor considers extended sales contracts to have built-in reagent price protection. Did they mean protection for themselves or clients or both?.


Successful companies must continually innovate to create new products and generate new profits.

" For the fiscal years ended May 31, 2010...we spent approximately $15.4 million...for research and development. Research and development expenses have increased over the past three years due to the acquisition of BioArray...and the subsequent development work on our molecular immunohematology offering."

"In August 2008, we invested in what we believe will be the future of the blood bankmolecular immunohematology....With the goal of improving transfusion medicine, we believe that molecular immunohematology will revolutionize blood bank operations.

In many countries, blood pre-transfusion testing is limited to the prevention of transfusion reactions and not for the prevention of alloimmunization, which occurs when antigens foreign to the patient are inadvertently introduced into the patient’s blood system through transfusions. If alloimmunization occurs, the patient develops new antibodies in response to the foreign antigens, thereby complicating future transfusions.

By using multiplex, cost-effective molecular testing, our molecular technology allows testing to prevent alloimmunization for better patient care."


In a consumer society, if a real need does not exist, companies try to create one.

So, can we now expect an onslaught of propaganda and industry-funded research to convince us that preventing alloimmunization is where it's at and what we should strive for?

My gut reaction is fuggedaboutit! But the writing is already on the wall:

Under "Risks", Immucor lists FDA "administrative action", governmental investigations and litigation, fluctuations in foreign currency, and more. Three that stood out:

(i) "A catastrophic event at our Norcross, Georgia facility would prevent us from producing many of our reagent products.

Substantially all our reagent products are produced in our Norcross facility.... and we currently have no plans to develop a third-party reagent manufacturing capability.

Therefore, if a catastrophic event occurred at the Norcross facility, such as a fire or tornado, many of those products could not be produced until the manufacturing portion of the facility was restored and cleared by the FDA.

We maintain a disaster plan to minimize the effects of such a catastrophe, and we have obtained insurance to protect against certain business interruption losses.

However, there can be no assurance that such coverage will be adequate or that such coverage will continue to remain available on acceptable terms, if at all."

MUSINGS: Despite a disaster plan to minimize effects (on clients and the bottom line?) the company's main worry seems to be that its insurance may not cover its losses.

Clients need to include a scenario with a possibly very long delay in obtaining reagents in their disaster plans. Think not only of time to restore production but also time to obtain FDA clearance on a restored facility.

(ii) "Gross margin volatility may negatively impact our profitability."

"Our gross margin may be volatile from period to period due to various factors, including instrument sales, reagent product mix and manufacturing costs....

The higher margins on the Capture reagents used on our instruments may not be enough to offset the lower margins on the instruments themselves...."

MUSINGS: Once again, the importance of Capture reagents to profits is emphasized. Immucor's gross profit margins for these reagents are among the highest in the business. When faced with, "Have I got a deal for you", best to think twice.

(iii) "If customers delay integrating our instruments into their operations, the growth of our business could be negatively impacted."

From time to time in the past, some of our customers have experienced significant delays between the purchase of an instrument and the time at which it has been successfully integrated into the customer’s existing operations and is generating reagent revenue at its expected annualized run rate. 

These delays may be due to a number of factors, including staffing and training issues and difficulties interfacing our instruments with the customer’s computer systems.

Because our business operates on a “razor/razorblade” model, such integration delays result in delayed purchases of the reagents used with the instrument.

A number of steps have mitigated these integration delays: improved performance of our field service staff, better instrument instructions, increased use of internet-based remote diagnostic tools, and more efficient scheduling of instrument installations....."


Potential clients should note the reasons for delayed implementation and acknowledgement of the “razor/razorblade” business model.

A razor/razorblade model is the well established business tactic of selling dependent goods for different prices. The one-time product is sold at a discount, while the second dependent one for which repeated purchases are required, is sold at a considerably higher relative price. Think of the practically free razor but expensive replacement razor blades or the low priced video game console and its dependent high priced games.


"In the U.S. and Canada, Ortho-Clinical Diagnostics (“Ortho”), a Johnson & Johnson company, is our main competitor. In Western Europe, our principal competitors are Bio-Rad Laboratories, Inc. (“Bio-Rad”) and Ortho. Both Ortho and Bio-Rad sell instrumentation as well as reagents. Our principal competitor in Japan is Ortho."


There is not much competition in transfusion service / immunohematolgy automation, nor for reagents for non-automated testing. Immucor, along with its main US competitor, Ortho-Clinical Diagnostics, is being investigated by the US Department of Justice concerning possible criminal violations of the antitrust laws.

Perhaps not unsurprisingly, both are the subjects of several private civil suits by customers (hospitals) seeking class certification and alleging price fixing.

Anytime you have a market oligopoly, a virtual duopoly, allegations of collusion and price fixing are bound to occur, but they are almost impossible to prove. 

For interest, a few more blood industry companies with SEC Form 10-K reports:
  • Johnson & Johnson (1 Mar. 2010) (parent company of Ortho-Clinical Diagnostics)
  • Tidbit in report (OCD has many more products besides reagents and automated instruments for pretransfusion blood testing)
  • "The Ortho-Clinical Diagnostics franchise achieved sales of $2.0 billion in 2009, a 6.6% increase over the prior year primarily attributable to the recent launch of the VITROS 3600 and 5600 analyzers."
  • Bio-Rad Laboratories (26 Feb. 2010)
  • Beckman Coulter (22 Feb. 2010)
  • Haemonetics (1 June 2010) - One tidbit (and are we surprised?):
  • "Our devices use single-use, proprietary consumables, and these consumable sales represent 87% of our total revenues."
You can discover many useful tidbits in SEC Form 10-K filings. These tidbits can be used to help customers decide on suppliers and to leverage information when negotiating contracts. I hope that this Goldfinger toolkit has given a few ideas.

For fun, here's the theme song from the Bond movie of the same name:
As always, the ideas are mine alone. Comments are most welcome BUT, due to excessive spam, please e-mail me personally or use the address in the newsletter notice. 

Saturday, July 24, 2010

United we stand? (Musings on competition for blood donors)

This blog examines a recent news item on the effects of a poor economy and increased competition for donors among blood suppliers in the USA and muses on economic basics, as applied to blood suppliers. The blog ends with a silly skit suggesting what competition for donors might look like in Canada, where Héma-Québec reigns supreme in La Belle Province and CBS has a monopoly in the Rest of Canada. The title derives from an old hit song by the British pop group, Brotherhood of Man.

Unlike fractionated blood products, where commercial drug companies "duke it out" across the globe, competition in providing blood and blood components is something foreign to Canada and many other countries. Hence, this item from the USA recently caught my eye:

Apparently, in Pennsylvania competition for donors has become fierce: the Pittsburgh-based Central Blood Bank (a division of the Institute for Transfusion Medicine) has increased the number of blood drives in Erie County, although it doesn't supply blood to hospitals there.

"The turf battle came to a head July 1 when Community Blood Bank held an impromptu blood drive outside the Sheraton Erie Bayfront Hotel, while the Central Blood Bank was holding an indoor one. Employees from each blood bank exchanged heated words, but the two organizations haven't talked since then...."
A Community Blood Bank spokesperson is reported as saying,
  • "It's a shame. We used to work together on projects. Not anymore."
  • The Central Blood Bank declined to return the reporter's phone calls requesting comment.
So, competition for blood donors seems to have taken a nasty turn in the USA. The news item goes on to report that, with the current struggling US economy, the Community Blood Bank will lose money in 2009-10. It has not laid off employees but has increased its blood prices.
Pointedly, Community Blood Bank's website specifies that it "only draws from the areas in which it supplies."
Writing a blog on the blood system as a business in which blood suppliers compete was further promoted when the latest Journal of Blood Services Management issue came out, prefaced by a letter explaining that it cannot meet its planned quarterly schedule. In reviewing the types of articles wanted, competition was listed as a suitable topic. For more on JBSM, see last July's blog, "Transfusion lite" - Back in the USSR?

For interest, you can now read the first JBSM issue free online.
What follows is a simplistic take on complex economic issues. I'm totally unqualified on the subject, being a mere, somewhat cynical observer of private sector machinations to generate profits. But, hey, why let ignorance stop one from voicing opinions.
Canadian Blood Services (CBS) and America's Blood Centers (Héma-Québec, but not CBS, belongs) are non-profit organizations (NPOs). By definition, NPOs use profits, if there are any, to pursue goals, rather than distributing them to owners or shareholders.
To survive, NPOs and other businesses must be profitable in most years or at least break even. That means that revenues must exceed expenses. Successful companies increase revenues or decrease expenses or do both.

Decreasing expenses involves strategies such as
1. Decreasing overall staff (a significant cost) via automation, centralization, regionalization, e.g., CBS's move to only 3 blood testing centres for all of Canada and one National Contact Centre for booking donor appointments

2. Decreasing staffing costs, achieved by hiring less qualified staff who can be paid less, e.g., CBS's move to use "donor care associates" in donor screening (as opposed to RNs)
3. Hiring more part-time and casual staff whose health care, pension, and other benefits do not need to be contributed to by the employer (statistics are hard to obtain and are not usually publicly accessible)
4. Forming consortia (or merging with others) to facilitate volume purchases by the group, e.g., Group Services for America's Blood Centers
Companies can increase revenues via increased sales volume or increased prices. In Canada (and other countries with mainly government-funded national blood suppliers), increasing revenues is not an option except by negotiating with relevant governments and who knows what goes on in those dark and dirty meetings, certainly not I.
In general, strategies used by companies to increase revenues may include the following. Some of these may apply to US blood suppliers.
  • Create a demand for products, if none exists, or an increase demand (e.g., commercial umbilical cord blood banks such as Alpha Cord and Pacific Cord .The latter offers 'concierge service'!)

  • Get ahead of the curve by moving into emerging, 'latest/greatest' in-demand products, and charging more for them (so called value-based pricing) e.g.,human cells, tissues, and cellular- and tissue-based products
  • Produce a better product than competitors, preferably at a competitive price, or argue for your product's value-added benefits (e.g., leukoreduced red cells, double red cell collections, improved customer service)
  • Increase distribution area so that the number of potential clients increases (rapid, reliable long distance transportation)
  • Increase clients with loss leaders ("Like our cheap RBC? Now have we got a deal for you...."), and later promote products with high profit margins (e.g., inexpensive or free instrumentation with costly, ongoing reagents)
  • Entice more clients with a positive corporate image, e.g., promote impressions of quality products and services via public relations campaigns and community involvement
  • Develop an effective and easily recognizable brand identity for the organization, e.g., CBS's logo and tag line, It's in you to give
  • From the website: "Canadian Blood Services has updated all key brand positioning elements and personality traits. The result is a focus on positioning Canadian Blood Services as the trusted place where Canadians can share their health and vitality to help others regain theirs."

    Since it's summer, and the city where I reside had its "silly summer parade" on Canada Day (July1), here's a skit that I hope makes you laugh. It's totally tongue in cheek and written with affection for the characters involved. My apologies to all concerned for taking such liberties.
    Just as the Pittsburgh's Central Blood Bank made an apparent raid into the territory of the Community Blood Bank, I could not help but wonder, WHAT IF Héma-Québec made a similar raid from Hull, Quebec across the river into Ottawa, Ontario, the site of CBS's head office? (Rough translation follows the skit.)
    • Graham (shocked): "Francine, quelle surprise! Mais, que fais-tu ici?
    • Francine (playful): "Bonjour, Graham. Ça Va?"
    • ===================================
    • Graham (puzzled but now more formal): "Mais, pourquoi, Francine? Vous êtes sur 'my turf'!"
    • Francine (smiling): "Oui, mais nous sommes toutes les canadiennes, n'est-ce pas?"
    • ===================================
    • Graham (ashen-faced): "Merde, Francine! J'accuse! N'avez vous aucune pitié?"
    • Francine (chuckling with a wicked gleam in her eyes): "Graham, c'est un signe des temps. Vive le Héma-Québec! ...(long pause...) Vive le Héma-Québec libre!"
    • ===================================
    • Graham (sweating profusely): Mindy, aidez-moi, s'il vous plait! Notre amie, elle est....'bonkers'! Il doit être son expérience avec ces Européens fou au ISBT!"
    • Mindy (ruefully shaking her head and with a mischievous glint in her eyes): "Désolé, mais vous êtes vous-même, mon ami! Voulez-vous le numéro de téléphone de Heather?"
    • Graham (shocked): "Francine, what a surprise! But what are you doing here?
    • Francine (playful): "Good day, Graham. How goes it?"
    • ===================================
    • Graham (puzzled): "But why, Francine? You are on my turf!"
    • Francine (smiling): "Yes, but we are all Canadians, no?"
    • ===================================
    • Graham (ashen-faced): "Sh_t, Francine! I accuse! Have you no pity?"
    • Francine (chuckling with a wicked gleam in her eyes): "Graham, it's a sign of the times. Long live Héma-Québec! ...(long pause...) Long live a free Héma-Québec!" (see historical relevance in Canada)
    • ===================================
    • Graham (sweating profusely): "Mindy, please help me! Our friend, she is....bonkers! It must be her experience with those crazy Europeans at ISBT!"
    • Mindy (casually shaking her head and with a mischievous glint in her eyes): "Sorry, but you are on your own, my friend. Do you want Heather's phone number?"
    .............END OF SILLY SKIT.........
    Doesn't a donor competition scenario, in Canada or anywhere, seem nuts? Everyone knows the maxim, united we stand, divided we fall, but is a Pennsylvania blood center ignoring it? Here's a sugar-sweet song version of the axiom:
    Another scenario comes to mind. WHAT IF the Brits made a raid across the Atlantic to poach American blood donors. As you ponder, consider lyrics for an updated version of this catchy Johnny Horton mega-hit, The Battle of New Orleans (funky version from Ed Sullivan show)
    For a serious glimpse into CBS's view of its business management strategies:

    1. The transformation of CBS. Strategy management to create results .....[Source: Sophie de Villers, Balanced Scorecard Forum in Dubai, UAE , March 2010]
    2. Embedding a results-based management culture / Moving modern management forward (Speaking notes) ....[Source: Ian Mumford, Performance and Planning Exchange Conference, May 2003]

    As always, the views are mine alone. Comments are most welcome BUT, due to excessive spam, please e-mail me personally or use the address in the newsletter notice.