Q: Blood transfusions are so commonplace they don’t get much attention. Would you give some context on the importance of transfusions and the business of the blood supply?
It is just expected that blood will be available for transfusion. Whether it’s cancer treatment, maternal postpartum hemorrhage, sickle cell, transplant surgery, anemia, or bleeding trauma from an auto accident or gunshot wound, they can all require substantial transfusions. The blood supply is foundational to modern medicine.
There are millions of transfusions each year. The probability that any given American will need a transfusion is roughly one in five to one in six; somebody in your immediate family has probably received a transfusion.
But fundamentally the blood system is unlike almost anything else. The reason all those transfusions are possible is because individuals, for no reason other than to do good, go out of their way to a blood drive or a donor center and endure the discomfort of a needle stick and the fatigue of donating a part of their body. And they really don’t get anything for it. It is a selfless act. That spirit of humanity is why this works.
Q: Where does Bloodworks Northwest fit in?
We manage a complex operation in the Pacific Northwest, covering most of the western parts of Washington and Oregon and also sending blood to Alaska. We will distribute more than a quarter million units of blood this year. And like 99% of the organizations ensuring the blood supply, Bloodworks Northwest is a nonprofit.
Q: How did a nonprofit-led model for managing such a crucial part of the healthcare system come about?
Coming out of World War II, as the Red Cross was building its national system, communities recognized the need for local supply of blood for local patients, which led to a proliferation of independent blood centers. Americans love to form associations, in the spirit of Alexis de Tocqueville.
There are now around 35 significant independent blood centers around the country. For the most part, we don’t overlap in our geographies. Our purpose is to ensure that any patient who needs a transfusion will receive it. That means, while we all certainly have local challenges, we recognize the need to be supportive of the other blood centers. It’s an informal arrangement, but we work together like a federation.
We have a system with flexibility and redundancy, which mitigates risk. It has been ensuring adequate blood supply in the U.S. for 70 years, which suggests to me the structure of the industry has good survival properties.
The blood supply is very sensitive to shocks. On any given day, we would like to have more blood somewhere than we do. Earlier this year, a cyberattack on OneBlood, an independent blood center that serves five states in the Southeast, followed by Hurricane Debby hitting Florida meant a steady supply of blood was severely reduced. All the other blood centers scrambled to make up the difference, shipping blood all over the country.
We also cooperate to minimize the cost of collecting and distributing blood and to make blood operations more efficient. Even though these blood centers are only tied together by common purpose, taken as a whole, the network really does a remarkable job.
Q: How does this approach compare to other countries?
What you see in Europe and the more economically advanced countries in Asia is a nationalized system which might be augmented by hospital-based blood collection and distribution activities.
Our model does seem unique. I don’t know of any that’s as fragmented and diverse as ours. But I quite like our arrangement. The Red Cross provides nationwide coverage and economies of scale. The independent blood centers offer a second separate network. Layered together, we have a system with flexibility and redundancy, which mitigates risk. It has been ensuring adequate blood supply in the U.S. for 70 years, which suggests to me the structure of the industry has good survival properties.
Q: What are the key challenges facing Bloodworks Northwest?
I was brought in as a turnaround CEO in 2019. The blood center was in difficult financial shape. We got that financial turnaround largely completed within the first 12 to 18 months. By then, of course, COVID had already started.
We got through that wild period. The Red Cross and the independent blood centers were transparent about how stretched the blood supply was at various times, but ultimately everybody who needed a transfusion received one. Serving the community in a moment of such turmoil was rewarding. It was also gratifying to watch development in our leadership ranks, from frontline supervisors to the board, as they responded to really tough times.
We’ve maintained our financial health through the pandemic and its aftershocks, including the Great Resignation and inflation. But Bloodworks Northwest is very much a part of the healthcare ecosystem and healthcare has had a rough ride over the last 15 years, and the last five years in particular.
Given how high the expenditure in healthcare is in the United States, it seems strange to say that resources in healthcare are limited. But, here in Washington state, operating profits for hospitals have been quite substantially negative for the past two years. Everybody is strapped. Hospitals essentially fund our work, so when our local hospitals have financial challenges, that impacts us.
We get just enough, which you could say is how it should be. Bloodworks can do its work on just enough. If we were to get just enough forever, I’d be satisfied with that. The worry is that we are not very shockproof right now. Considering the kind of work we do and how tumultuous the environment has been over the past five years, it’s not comfortable to operate on just enough.
Q: You mentioned that donating blood is a selfless act. Is it a challenge to get people to donate?
There’s no evidence that Americans are becoming less generous, but we are a lot more distracted. There’s a lot competing for our time and attention. Because of smartphones, social media, the internet, etc., people receive and absorb an exploding range of media channels in new and different ways. And our society has gotten, I guess I’ll just say, noisier.
We try to make donating as easy as possible in an era where our priority is convenience, convenience, convenience. Still, it’s a substantial marketing problem that we’re tackling. How do we cut through and get their attention? It’s very hard.
We think about a range of audiences. Breaking it down by age is one way we segment. For example, Americans are donating blood more in their elder years than ever before, which I think is beautiful and amazing. I just love that fact.
Middle age is tough. I think it’s a fair generalization to say that folks in their middle age are super busy. There are a lot of demands on their time. We definitely see donation rates fall off.
And for younger folks our challenge is, how do we make it relevant? We put out messages about the idea that blood donation is part of what it means to be an adult in a community—a way to take care of one another.
We use all the various channels—social media, streaming, traditional media, online print, video, and so on. We do multilingual programming. And we work to deliver personalized messaging in the channels that each audience wants to use.
Q: Would paying for blood make a difference?
We have run lots of programs where if you donate, you get something like a $25 Starbucks gift card. Some people would say that’s a payment. I’d say it’s very small way to say thank you to someone willing to roll up their sleeve to save a life.
We haven’t needed to pay for blood, but historically it was common. That model came under scrutiny in the 1960s. It became apparent that those receiving payment for blood, as opposed to donating it, had a higher incidence of certain infectious diseases. That led to an association: paying for blood is dangerous. Our ability to screen blood for infectious diseases was limited, so there was some logic to it back then.
Today, our ability to detect infectious disease is orders of magnitude better. It’s amazing at this point. The likelihood of a transfusion transmitting infectious disease is incredibly low. So the association is no longer accurate. It’s also not relevant. We collect enough blood through donations.
I’d also point that out because people who would be motivated by payment already have an option. The plasma industry, which supplies components of blood used for medications, therapies, and diagnostic kits, pays for blood plasma. In much of Europe, it’s not legal to pay people for their plasma, so in the U.S. we have an enormous number of plasma donation centers. The plasma collected is used here and around the world for medical purposes.
Q: How did you come to this role?
I had been consulting for 20 years. It was the right time to come off the road and enjoy the teen years of my children. Also, my personal motivation has always been oriented toward serving the community in some way. I joined the Marine Corps right out of college because I wanted to serve. I was attracted to Yale SOM because of the business and society mission. And at McKinsey, my consulting was largely with nonprofit healthcare, and I wanted to continue to work in a part of the economy that clearly placed impact above profit.
Bloodworks Northwest was the right opportunity. It’s big enough to make a difference, yet small enough to be nimble and have a familial aspect that I like a lot.
Q: What stood out in the move from the private sector to a nonprofit?
It’s obvious, but I didn’t fully appreciate the effect until I lived it. In a for-profit corporation, the work is ultimately measured by a number with a dollar sign in front of it. That is an incredibly simplifying fact. It makes life way easier.
You can’t do that in a nonprofit. We measure many of our activities in dollars, but eventually you have dollars and cents on one side of the equation and the effect on human life on the other side. That’s an incommensurability problem—you can’t relate the two. How do you quantify the impact of a delay for a cancer patient receiving a red cell transfusion? What’s more valuable, collecting and distributing blood or testing patients for rare antibodies to ensure they receive the right transfusion? Our resources will always be constrained. We can’t use mathematics to solve for what’s most important, which means we have to make ethical choices.
I don’t mean ethics in the sense of following the rules. I mean ethics in the sense of morally defensible—trying to make the best choice for the community we serve through thoughtful judgment calls. Folks who have been in nonprofit their whole lives will say, well, no kidding. But for me, I knew it in theory; living it is profoundly different.
Q: Has your experience at Yale SOM played into the way you approach your work?
As I said, I chose Yale SOM out of the Marines because the mission resonated with me. I arrived knowing nothing about business or private-sector management. I took advantage of the program’s rigor and was extremely well prepared to go work in management consulting.
But all MBA programs teach you to manage. If the program doesn’t include a contextualizing frame, it simply provides students with tools without preparing them to understand whether they’re apply them for beneficent or nefarious purposes.
What I loved about Yale SOM is that the program didn’t teach us simply to be managers for whatever purpose. Everything was in a context of our responsibilities as members of society. There are things that we should be attempting to do that are bigger than ourselves—that’s what it means to be a leader in business and society.
We need leaders with technical managerial skills and a mindset that lets them put them to good purpose. That resonated for me from day one. If anything, I believe it more firmly now.
I have stayed connected with Yale SOM since I graduated because I’m super grateful to the school. Bloodworks Northwest recruits at Yale SOM now. We had our third class of interns this past summer, and it’s been fantastic.
“The Yale School of Management is the graduate business school of Yale University, a private research university in New Haven, Connecticut.”
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