Blood feud erupts over payments of cash to donors.

For-profits battling to overcome unsavory reputation

It's a bloody feud that rifts the Southland chapter of the non-profit American Red Cross from the Sherman Oaks-based HemaCare Corp., a private-sector blood dealer.

And it's a feud that could spread across the country, market by market.

HemaCare's chieftain said the Red Cross is a blood monopoly and has acted like it; a Red Cross top dog said he is philosophically opposed to HemaCare's money-for-blood profit motive and questions the safety of HemaCare's blood.

For decades, the Red Cross has been an icon on the American landscape, the charitable agency to which Americans donated blood, for free.

Now HemaCare is buying blood product from donors and re-selling it to Southland hospitals, as a money-making venture.

The blood feud is a somewhat new turn of events -- and with HemaCare looking for expansion capital, one that might be replayed in other markets in the 1990s.

"We'd like to go into Northern California next, and then possibly Georgia," said Hal Lieberman, chief executive at HemaCare -- words certain to be taken as a war cry by Red Cross executives across the country.

Coast-to-coast, the Red Cross has been, very often, something of a chain of regional blood bank monopolies. And, in fact, Red Cross charges hospitals for blood and blood products.

On the other hand, there has long been a somewhat unsavory aura haunting the money-for-blood shops, which, certainly in earlier decades, always seemed to operate out of cheap storefronts not far from the nearest Greyhound bus station.

HemaCare, a $12 million (annual sales) operation, traded on the NASDAQ, wants badly to dispel the old money-for-blood stereotypes.

"We are not like the old days. Many of them (for-profit blood collectors) were schlocky. They didn't test the blood; they were fly-by-night operations. But we've been in business 14 years. And our products are all tested. We have proven as safe as blood product collected from unpaid donors," said Lieberman.

For the most part, HemaCare does not collect blood, but blood platelets at its Sherman Oaks headquarters. (Selling blood collected from paid donors is illegal in California.) Donors are solicited on college campuses and in the Daily News newspaper.

The platelets, when transfused into patients, help blood to clot. For example, blood platelets are transfused into cancer victims who have undergone chemotherapy and lost some of their blood's clotting capability.

Essentially, in two- to three-hour sessions, HemaCare's paid donors have blood sucked out of their right arms, piped into a centrifuge in which platelets are separated out, and then re-transfused back into their left arms.

Donors get $50 a session, and watch a "first-run video movie," to while away the time, said Lieberman.

"But they don't get to choose the movie - it's like being on an airplane," he observed. "It (donating blood) calls for a regular commitment of time. They (donors) deserve to be compensated for their time."

About one pint of platelets is removed from a donor in each session -- a pint worth $500 when sold to local hospitals, said Lieberman.

Donor's blood is tested for infectious diseases, such as hepatitis, the HIV-AIDS virus, or other ailments.

Hospitals are buying the platelets, even as reservations are expressed about blood money and paid donors.

"We probably would prefer to get blood from volunteer (unpaid) donors," said Dr. Steven Kleinman, co-director of transfusion medicine at the UCLA Medical Center. "But HemaCare has filled a niche. They sell platelets, and deliver in a timely fashion."

Blood platelets, outside the body, die in about five days -- as opposed to 42 days for ordinary blood -- so quick and ready supplies of platelets are important to hospitals, experts explained.

To date, said Kleinman, no evidence has surfaced that HemaCare blood products are less safe than Red Cross blood products. In fact, contamination rates are extremely low, with less than one in 10,000 platelet collections testing positive for AIDS "markers" -- antibodies the body develops in response to the HIV virus -- in either Red Cross or HemaCare testing.

Still, Kleinman said he has some residual uneasiness about bought blood.

"All the tests we do (to check blood for infectious diseases) are not perfect," he said. "If a donor has recently been exposed to the AIDS virus, it takes a couple of months before it shows up in a blood test."

But HemaCare's Lieberman said that all of HemaCare's donors are screened to eliminate "high-risk" individuals, and, of course, each blood sample is tested.

"What really bothers Red Cross and others is that we are competition, and they have had a monopoly," said Lieberman. He added that HemaCare donors are given physical examinations before donating, and most are repeat donors.

UCLA Medical Center, St. John's Hospital, and HMO giant Kaiser Permanente all buy HemaCare product, said Lieberman. "We couldn't stay in business 14 years if our product wasn't just as safe as anyone else's. We'd be strung up, politically speaking, from the nearest pole."

At the polar opposite from HemaCare's Lieberman stands Dan Connor, principal officer with the blood services division of the American Red Cross Southern California Region.

"At the Red Cross, we believe in altruism, and people doing things to help their neighbors. Philosophically, we are very opposed to the sort of thing HemaCare is doing," said Connor.

Besides, said Connor, "I would rather have a blood transfusion from someone who had no monetary incentive not to completely truthful."

In other words, Connor does not want to get blood samples from someone who has a financial incentive to lie about his or her sexual practices or drug use.

Like Kleinman, Connor raised the specter of an individual recently infected with the AIDS virus. "The individual may not test positive for the AIDS virus. It can happen in either pool, one of volunteers or one of people getting paid. But I would rather take my chances with volunteers," he said.

Connor contended that HemaCare's competition does not spur Red Cross on in any way. "We provide the best product and services we can, whether there is competition or not," he said.

Yet Connor conceded that HemaCare has perked up his interest in price. "We look at our fees a little more closely than otherwise," he said.

Still, Red Cross charges $520 and up for a pint of platelets, slightly more than HemaCare's price.

Connor pointed out that the state Legislature has recently passed a bill requiring all collectors of blood and blood products to establish plans to eventually have all-volunteer donor pools. In other words, no more paid donors, a goal to be achieved in a 10-year period.

But Lieberman said the state legislation is not mandatory, and besides, other incentives could be offered, such as catalogue items or vacations, under the legislation. "But we prefer to just give cash and let the donor decide what to do with it," he said.

Connor said that the Red Cross has also increased its lists of unpaid donors in recent years, and last year took 20,000 donations, as opposed to 8,000 three years ago.

"We want to boost that even further," he said. Connor added that even finding donors for the lengthy blood platelets donation procedure has not been difficult.

But for Lieberman, the successful introduction of blood platelet collection in Southern California may serve as a national model. He is in meetings with Chicago-based Kemper Securities to raise capital, possibly through an unspecified corporate partnership, to expand services to other regions. "There are other cities with shortages of blood product. We may go into those regions," he said.