Monday, November 11, 2013

Lest we forget (Musings on accountability of national blood suppliers)

Updated 12 Nov. 2013
This month's blog was completed on November 11, 2013, known as Remembrance Day in Commonwealth countries and commemorated on this day because the Great War ended in 1918 at the '11th hour of the 11th day of the 11th month'. Hence its title, Lest we forget

I started a draft of the blog after reading CBS's 2013 Report to Canadians (published 4 Oct.). Like issues of AABB's Transfusion, it became bathroom reading.  Initially the blog was going to be a few miscellaneous musings and questions on tidbits that struck me. As usual, I hoped a theme would magically emerge by publication date. 

Then on Oct. 28, 2013 independent performance review of CBS by Ernst & Young was released, which answered some questions. CBS also posted a management response to the performance review.

That's when the blog's focus became clear. The annual report and performance review were about accountability, something we should never forget.  It's self-evident that organizations and health professionals on the public payroll need to be accountable. To whom and for what is the stuff of cliches and open to discussion, if not debate.

So.....If you're 'into' transfusion medicine and blood banking, these reports are loaded with goodies worth reading. 
Even if 'you're not just that into blood suppliers,' the CBS report and performance review provide a banquet of food for thought.

I hope it relates no matter where you live. For comparison to other nations with publicly funded blood suppliers, see

What follows are my musings on a few selected aspects of the CBS report and performance review, the 'goodies' I find most fascinating or amusing (she said with an evil grin). Read on if you too are curious about 
  • How it's efficiencies über alles when it comes to reducing staff costs by consolidating testing and production, outsourcing, decreasing staff and hiring less qualified ones
  • Not so much emphasis on efficiency when it comes to executive compensation
  • How much it costs to produce transfusable products 
  • Cost and trends for plasma-derived products such as immunoglobulins
Before beginning, as the review notes, kudos to CBS, which has successfully:
  • Regained public and stakeholder trust in the blood supply 
  • Implemented safety procedures and tests resulting in a blood system where safety aligns with international leading practices 
  • Increased stakeholder engagement and transparency through open Board meetings, national and regional liaison committees
Transparency remains an issue but, compared to others, CBS bares its inner goings-on admirably. We are the champions...

First, as a webmaster I can't help but notice that when you go to the CBS website, it takes 4 clicks to get to the Report's entry page. And, unless you notice the menu at the top, it's a whopping 15 more 'Next' clicks to get to the Financial Report entry page, where you can select several versions of the 'nitty-gritty' such as
Wow, that was hard work! Didn't see the menu the first go-round. 

Canada is the world's second largest country by land mass with a population of ~ 35 million, mostly concentrated near the USA border.

To serve this population and geographical area (excluding Quebec), CBS currently has (graphic, p.30 of annual report)

  • 42 permanent collection sites
  • 2 blood testing facilities 
  • 10 manufacturing facilities (4 were axed - 'consolidated' - in 2012-13 with more scheduled to close in the future)
  • Operates with ~4,700 staff and 17,000 volunteers
  • Collects ~ 1 million units of whole blood and apheresis donations annually
  • Has a budget of ~$1 billion paid for by Canadian tax payers
CBS has these business lines:

  • Transfusable Products (RBC, platelets, plasma)
  • Plasma Protein Products (also transfusable, but what the hey)
  • Diagnostic Services
  • Stem Cells
  • Organs and Tissues
Only the first three will be mentioned in the blog. 

Now the good stuff, an 'executive version' through the filter of my biases.


Full-time equivalent positions (FTEs) decreased by ~124 FTEs, within the Transfusable Products program, which contributed to $22 million of efficiencies

CBS reports staff costs as $276,824,000 or ~58% of total costs.
Presumably this does not include executive compensation. 

Staff costs are often cited as higher than 58% but it's hard to compare workplaces. Regardless, staffing usually constitutes the highest cost, so employers continue to eliminate well educated staff and look for cheaper, invariably less well trained, workers. 

Under the umbrella of efficiencies, every year CBS decreases the number of staff, hires less trained, cheaper staff, and considers outsourcing. It's a big deal. For example, the CBS performance review mentioned 
  • Efficiency 93x, efficiencies 25x, efficient 8x. Total=126
In its response to the performance review, CBS mentioned 
  • Efficiency 50x, efficiencies 43x, efficient 5x. Total=98
In fairness, the review mentioned the motherhood issue of safety 226 times. 

Of course, cost is closely related to efficiency. The performance review mentioned it 747 times. Which more or less reveals the performance review's priority, decreasing government costs. Judging by mentions ('hits' in search term parlance), cost is more than 3 times as important as safety.

The review's Recommendation #23: 
'CBS should continue to explore opportunities to optimize staff mix by implementing the use of donor care associates.'

The CBS response
CSB acknowledges that the largest cost driver in the collections function is staff costs.....CBS will continue to review its staff mix and optimize where viable. 
The Donor Care Associates role has been piloted ....and Health Canada approved this role in April 2013. The organization is planning to further implement the Donor Care Associates role over the coming fiscal years.
The CBS website explains the purpose of hiring 'donor care associates' and training them: The strategy is to better align skills and knowledge of staff to the requirements of the clinic functions

Oh yah. Aligning staff skills and knowledge to functions is what it's all about, meaning hiring cheaper staff, similar to right sizing, biz jargon for layoffs, firings, or, less toxic, not filling vacant positions when staff leave or retire. But not less toxic to remaining staff who must do more with less and suffer burnout as a result.

The review claims that, while CBS has improved its productivity, measured by labour hours per unit, by 5% since 2008-09:
CBS remains less productive than comparable blood services organizations in donor recruitment and production and distribution processes. 
Higher staff costs account for most of the difference in whole blood clinic costs compared to 2 of the 3 other blood service organizations reviewed. 
Approximately 75% of CBS employees are unionized.
The 3 comparable blood organizations reviewed remain a mystery, but surely one is Canada's Héma-Québec, perhaps the one with equally 'high staff costs.' 

My read is that Ernst & Young are suggesting CBS should increase productivity by paying staff less. Hard to do in unionized setting unless you replace well paid staff by less educated ones. For example:
  • 6 staff work 3 hours to produce outcome. If average wage is $20/hr cost is $360 (6x3x20) 
  • If staff paid $10/hr, cost is only $180. 
Hey, immediately we're 100% more productive. Viva CBS! We are the champions...

Besides aligning skills to function, apparently CBS can also decrease costs by divesting some or all of its Diagnostic Services business line. 

For interest, CBS's Diagnostic Services includes many things but mostly it's the patient side of CBS: prenatal testing, pretransfusion testing, and antibody investigations (patients and donors). In other words, Diagnostic Services is largely staffed by medical technologists who love red cell serology. 

My ears perked because for a short time in 1999-2000 I was 'assman' in the diagnostic services lab at the CBS Edmonton Centre. (assman, how the Quality Dept. addressed mail to the assistant lab manager). 

Diagnostic Services is an ongoing interest, having worked in one in Winnipeg for 13 years at the Canadian Red Cross Blood Transfusion Service - a large combined blood centre and regional crossmatch and prenatal testing facility  - that morphed into CBS, post-Krever Commission

And the lab in Edmonton is currently managed by a graduate of the first Med Lab Science class I taught from start to finish at the University of Alberta, one of my original 'kids'.

With that history, any mention of divesting Diagnostic Services gets immediate attention. The review's Recommendation #32: 
The provincial and territorial governments should work with CBS to investigate opportunities to decrease costs.  
Decreasing costs may be achieved through centralization of testing or divesting testing services performed by CBS to local hospitals. 
Transferring prenatal and pretransfusion testing from CBS to local hospitals has long been discussed in Canada's transfusion community. 

The irony is that CBS's pretransfusion testing lab in Winnipeg is already a cost-effective, centralized testing service. Same with prenatal testing in Alberta. So transferring these functions to local hospitals would mean significant increased cost to health regions. 

Since the money all comes from the same pot (the provinces and territories), it may actually cost more to transfer testing to hospitals, to say nothing of the changes they would need to make and adapt to. 

Or perhaps CBS will have a go at further centralizing diagnostic services as they have donor testing and component production. 

Before entering the morass of  executive compensation at CBS, two items that should be 'ho hum'...

CPU is the ratio of total expenses to shipments of all products. According to the CBS annual report

  • Cost per unit for 2012-13 was $386
Although cost comparisons are impossible, given differences in how they are calculated, in bathroom reading I noticed that the UK NHSBT reports the costs of a unit of RBC  in 2012-13 as £123/unit ($204 CDN).

So raw data show the UK blood supplier as ~50% more efficient than Canada. An unfair comparison since CBS data include all products, not just RBC, and we're a huge country compared to them. Still interesting....

As a percentage share of total expenses, CBS reports transfusable products and plasma-derived ones as almost equal. 

  • 47.2% Transfusable Products
  • 46.3% Plasma Protein Products* 
* Plasma protein products include plasma-derived and recombinant therapeutic products, e.g., immunoglobulin (Ig), albumin, hyperimmunes, and clotting factors (factor IX, factor VIII, factor VIIa).

Plasma protein products such as Ig continue to be those with high continued growth.

CBS reports that, since self-sufficiency for plasma protein products  is not operationally or economically feasible in a volunteer, non-remunerated model, they try to maintain a sufficiency of 30% for Ig. 

To meet demand for Ig, CBS buys surplus recovered plasma from voluntary donations from the USA for fractionation.

It's debatable that CBS has ever seriously tried to get more plasma from volunteers. In March 2013 it closed a plasma collection centre in Thunder Bay, effectively exporting jobs to the USA.

My take on the plasma collection closure:

Seems that CBS buying plasma from USA to produce Canada's plasma protein products is cheaper than collecting plasma ourselves. Fair enough, but why not be transparent? 

Which is why I'm skeptical of CBS's statement in the 2013 report:

  • Self-sufficiency for plasma protein products  is not operationally or economically feasible in a volunteer, non-remunerated model.
Have they ever seriously tried? If paid plasma donors are heroes, wouldn't volunteers be even more heroic?
Then there's the matter of paid plasma collection sites coming to Canada, seemingly supported by Health Canada and CBS CEO Sher.
  • Day tripper (Musings on HC's instructions to the jury on paid plasma)
CBS executive compensation (pp. 62-3 of annual report) includes several elements:

  • Base salary
  • Annual pay-at-risk, long-term incentives
  • Pension, benefits and perquisites
In 2012-13 CBS executives earned $283,000 to $342,000, with the CEO Graham Sher earning $560,000. 'Compensation at risk' as a percentage of base pay was 25% for the CEO and 20% for most executives.

'Compensation at risk' is tied to performance measures and means the percentage of base salary that executives could lose if they don't achieve defined performance measures. Using the figures above, it means the CEO could earn between $420K and $560K depending on performance.

It's not public knowledge but I wonder if the CBS CEO, or any executives, have ever lost any 'compensation at risk.' It would also be more transparent if specific performance measure criteria were public, given that Canadian tax payers foot the bill.

If not, 'compensation at risk' sounds good but may be a bit of a scam, which is why the performance review on executive compensation is informative. The review notes that 

  • Compensation of CBS leadership team is positioned at the high end or exceeds the range against other comparable national publicly funded organizations.
  • The analysis found that the low end of CBS executive compensation is positioned slightly higher than the average for comparators, while its high end is 20% to 30% higher than comparators.
Also, the review assesses that, while CBS has a formal process in place, as well as processes to support their continuous professional development,
  • The review of the process found that there is a lack of clarity in how and which performance indicators and outcomes are linked to executive management compensation.
So like much of what CBS spouts, it sounds good, but is not transparent and may be total bafflegab. Or not. We don't know, which is the problem.

Speaking of bafflegab, or annoying, pompous jargon that consultants dream up, the CBS management response to the performance review has 10 'hits' for best practice, 16 for leverage, and 47 for strategic

At least they weren't thinking outside the box or proposing a paradigm shift.   

Lest we forget, all players in publicly funded health care need to be accountable, including governments, health institutions, service providers, clients, health professionals, and patients. 

To whom is CBS MAINLY accountable? 
To governments (provincial and federal) on whose dime it operates and to whom cost is king? To its customers, hospital transfusion services and their clients (patients) to whom safety is paramount? 

My take: The priority of governments today is cost-efficiency. Yes, lip service to safety but the CBS performance review referenced safety 226 times versus cost 747 times and efficiency (meaning cost efficiency) 126 times.

And accountable for what?
For improving and maintaining blood safety? For saving tax payers money? My take: Both with cost the priority. 

Nothing has changed from the '80s and '90s when Canada's blood experts judged that 
  • Discarding Factor VIII concentrates was too expensive (since hemophiliacs were all likely infected anyway)
  •  Surrogate tests, as implemented in USA for hepatitis C, were unscientific (We are so much smarter in Canada)
Bottom line: I give CBS credit for showing its dirty laundry (performance review) in public. In that sense, from a Canadian perspective, accountability exists. 
As always, comments are most welcome. 

Further Reading