A bad business of blood

Making money out of other people's altruism is not just wrong. It won't work, says Nick Cohen last week stocks fell dangerously low Nick Cohen looks at the 'new'

GIVING blood for nothing to complete strangers you'll probably never meet (and may dislike if you did) is not a virtue which chimes with modern business practice. There is no market mechanism, no exploitation of the laws of supply and demand. How much would a dying man pay for the pints of blood which would save him? pounds 100? pounds 1,000? Everything he's got?

Such calculations have never entered the minds of England's blood donors. The old National Blood Transfusion Service was founded alongside the National Health Service in 1948 and was based on the assumption that hundreds of thousands would give blood freely. Sometimes donors gave out of altruism, sometimes out of patriotism - stock went up during the Falklands War, for example. Social scientists with a bent towards moral philosophy could argue that donors gave out of a faint sense of enlightened self-interest: give your blood today and, with luck, other people's blood would be available when you needed it. Some even said the gifts weren't altruism but egoism: people gave because it made them feel better about themselves.

The arguments did not matter greatly. What mattered was that the founding principle of the NHS - that health care be free at the point of demand - encouraged ideals of "social duty and reciprocity".

The phrase was coined by the late Professor Richard Titmuss, the guru of post-war welfare state theory, who wrote a famous treatise on blood donation published 25 years ago. Last week, Stephen Dorrell, Secretary of State for Health, announced fundamental changes to a service which, as Professor Titmuss showed, relies more than any other on people's feelings of involvement with and obligation to a wider society. In 1980s management- speak, the true dialect of the Conservative Party, he said he would "simplify structures" and ensure bureaucracy was "streamlined" so that the service would become more "effective". His Commons statement confirmed that 300 jobs would be lost and pounds 10 million saved by stopping the processing and testing of blood at five regional centres.

The announcement did not come out of the blue. It was the culmination of 18 months of commercialisation and quangoisation. Since 1993, power over England's blood supplies has been in the hands of the National Blood Authority (NBA), a typical quango of the late Conservative period. The chief executive, John Adey, came from the American health company Baxter Healthcare - which sold its blood packs to the NHS. Last year it was discovered that he was combining his job at the blood authority with a partnership in a Wiltshire nursing home

He strongly resists accusations that the blood service is being slowly privatised. "There's no question of this being a business," he said recently. "But you do need to do some more business-like things."

The "things" have included plans to sell by-products of plasma - the liquid component of blood - to Germany, which the NBA described "as our principle export market". The next idea was to arrange a pounds 500,000 deal with SmithKline Beecham, makers of Ribena, and McVitie's. The two companies would supply free drinks and biscuits at the 2.4 million annual donor sessions; in return, they would get home addresses for junk mail. The idea of a sponsored NHS, brought to you by Jaffa Cakes, created such public hilarity and shock that the deal was dropped. Then last summer the authority tried to save pounds 700,000 by buying blood bags from the Australian company Tuta. But some of the bags were allegedly found to have faulty seals and it cost pounds 3 million to replace them. The families of several patients claimed that blood from faulty bags had poisoned their relatives.

The series of fiascos should have taught the Department of Health what many people who work in the private sector already know: British managers are often good at coming up with business-like ideas, but not so good at producing "business-like things" by putting the ideas into practice.

Senior executives in the blood service are disillusioned. They will not speak publicly because, under the new regime, employees face disciplinary action if they take their concerns to the press or Parliament. But one executive talked privately of "uncontrolled changes", a "dearth of talent" and a "new breed of managers who think that sustaining blood supplies is like selling widgets".

Take Mr Dorrell's announcement last week. With work concentrated in fewer and bigger centres, more blood will be moved around the country. The dangers of a mix-up, in which somebody is given blood from the wrong group or contaminated blood, will therefore increase. It follows that a national computer system is needed, which can produce 14- to 16-digit bar codes, giving every blood sample in the country a unique number. No such system is in place, though people who work in the blood service had expected it to be up and running before the regional centres were closed. It was due to start in May but managers have still not been able to decide which companies should get the contract. So the blood service will continue to rely on existing systems, which can produce only six-figure bar codes. Since even a small regional centre runs through its list of permitted numbers in 18 months, the dangers of incompatible samples from different donors having the same number are considerable.

The NBA and Mr Dorrell resent the accusation that they are allowing businessmen to destroy a public asset. The minister promised that his proposals would lead to centres of excellence being created and the formation of a national users' group to monitor services to hospitals. He quoted distinguished consultants who believe that he is improving a service, which even its supporters admit has its inefficiencies and failings.

But the one group he has failed to convince or perhaps understand are the blood donors themselves. Many donors, unable to follow the arguments about optimum efficiency in the NHS internal market, are in revolt because the Ribena farce, the proposed blood sales and the sacking of staff they know and like feels wrong.

This year has seen an unprecedented uprising among donors in Merseyside where a regional testing and processing centre will be closed. More than 1,000 have organised themselves into a donor association. Billy Vaughan, one of the association members, told NBA officials earlier this year that he had received 300 letters from donors saying they had stopped giving because they were "disillusioned" with the service.

Sue Kilroe, a fellow member of the association, said she had given since she was 18, because it "was nice to be able to help people" in a world where "nobody does anything for free any more". Now she was organising protests because the donors - without whose charity the NBA could not exist - had been given no power by the quango or the management consultants it uses to veto change.

Underlying their anger is an anguish at what is happening to the NHS. Professor Titmuss would have understood. His classic study, The Gift Relationship, showed how market principles were inefficient in health. In the United States, where poor donors from "skid row" sold (and continue to sell) their blood, contaminated stocks were common. A man "coerced" by poverty into selling blood was not going to lose his fee by telling the blood bank that he had hepatitis or any other blood-transmitted disease.

In Britain contamination was rarer because people gave freely and had no need to lie. The British were not better people than the Americans; it was just that the creation of the NHS - "the most unsordid act of British social policy in the Twentieth Century" - allowed and encouraged altruism. The American health marketplace (where 400 companies today collect, buy and sell blood) failed because it relied on the poor giving blood for money out of economic desperation and, by extension, forced patients to face the risk of poisoning.

Titmuss was a sophisticated thinker who dominated the post-war generation of social theorists at the London School of Economics. But his writings show a relatively simple pride in the NHS. The feeling that Britain may have lost an empire but had created a more civilised society was common after the war.

That pride is now disappearing. It is too early to say if blood donations will fall. The Government maintains that there is no evidence that donors are walking away in disgust. But this year there have been well-publicised shortages. And last week, unknown to the public, stocks in London and Manchester fell to dangerously low levels. Sometimes the most effective policy for management is to stop trying to be efficient, knock off early and go to the golf club.