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Financial issues cut into Red Cross


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    Red Cross delivery people on strike outside of a Red Cross event at the Wachovia Center in Philadelphia, Penn.

    - John Dimsdale / Marketplace

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    A Red Cross delivery man hands a leaflet to a blood donor.

    - John Dimsdale / Marketplace

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    Red Cross workers at the Wachovia Center in Philadelphia, Penn.

    - John Dimsdale / Marketplace

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    A Red Cross worker handles vials of blood

    - John Dimsdale / Marketplace

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    Vials of blood prepared for storage and transport.

    - John Dimsdale / Marketplace

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    Red Cross workers prepare to store and transport vials of blood.

    - John Dimsdale / Marketplace

TEXT OF STORY

Kai Ryssdal: As we talked about in our Philanthropy series a couple of weeks ago, the recession hit charities as hard as it hit anybody. The American Red Cross is one of those charities. It's struggling with an overall drop in donations, of course.

But the Red Cross is also facing some extra financial challenges. The way it collects and distributes blood has been under federal court supervision for almost 20 years. Financial scandals earlier in this decade have tarnished its reputation somewhat. And, lately, workers for the Red Cross have complained about cost-cutting.

Our Washington bureau chief John Dimsdale has the story.


JOHN DIMSDALE: Philadelphia's cavernous Wachovia Center is usually home to the Flyer's ice hockey team. But a couple weekends ago it hosted more than 600 blood donors, laying prone on gurneys as Red Cross medics in white coats drew blood.

But outside on the rainy streets, drivers of blood mobiles and delivery trucks handed out leaflets to the blood donors explaining why they're on strike.

Carl London, who's worked for the Red Cross for 30 years, says the charity has laid off so many delivery people that those who are left routinely work 12 to 14 hour days, seven days a week.

CARL LONDON: The lack of manpower leads to fatigue. Fatigue leads to mistakes. Mistakes lead to the risk of the blood products once they are received in the hospital, which put the public at risk.

Red Cross workers say the long hours mean blood could be improperly screened for disease, or mislabeled, or contaminated through careless transport or storage. In October, a union sponsored study found chronic under-staffing, high turnover and lack of training for all levels of the Red Cross' 33,000 employees.

Christine Holschlag, a union leader in Hartford, Conn., is a Red Cross phlebotomist or blood taker. In her six years there, she's seen the number of registered nurses cut from 30 to 12.

CHRISTINE HOLSCHLAG: So you may be at a blood drive in Connecticut, and there may not be a licensed person there. If there's an issue of assessing an eligible donor, the nurse is supposed to come in and assess to make sure the product is going to be a good product and the recipient is receiving something that's safe.

At national Red Cross headquarters in Washington, Gail McGovern is the 8th President in the last 10 years.

GAIL MCGOVERN: I did want to sign up for a challenge, but I really walked into a challenge.

When McGovern took over last year, the Red Cross was $200 million in debt. And the government had assessed millions in fines for mishandled blood. Using her management background from AT&T and Fidelity Investments, McGovern slashed 1,300 jobs, cut raises, benefits and operating expenses. She won't discuss union complaints, saying they're part of labor negotiations. But she says she's been through downsizing at private companies and humanitarian organizations are completely different.

MCGOVERN: People are here because they want to make a difference. They are here because they want to help others. When employees look to left and right of them and see cubicles next to them are empty, they experience it in a much more severe way than you would suspect in a for-profit environment.

McGovern's cuts have eliminated three-fourths of the Red Cross' deficit. But it's still been unable to shake government concerns about the safety of its $2 billion a year blood operations. The latest FDA ordered recall of possibly tainted blood products was just over a month ago.

The director of the FDA's office of compliance, Mary Malarkey, says the Red Cross is still screening and storing blood improperly.

MARY MALARKEY: That's something they are really struggling to get a handle on and that we are seeing some progress but unfortunately, I guess I would say the pace of the progress has been somewhat slow.

McGovern says she understands why the FDA is concerned.

McGOVERN: I applaud their zeal in ensuring that the nation's blood supply is safe. We also are monomaniacal when it comes to patient safety. We're seeing a tremendous improvement, particularly over the last 18 months in our number of recall products, in our problem management areas.

But so far those improvements have not been enough for FDA regulators to stop the warnings and lift a 17-year-old consent decree that requires close government scrutiny of the Red Cross' blood operations.

In Washington, I'm John Dimsdale for Marketplace.

About the author

As head of Marketplace’s Washington, D.C. bureau, John Dimsdale provides insightful commentary on the intersection of government and money for the entire Marketplace portfolio.

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