The concept of a commercial blood collection system
Previously, it was noted that in most countries, a system of partial pricing is applied to blood use, with the final recipients paying for their blood use even though the initial suppliers are not compensated for their efforts. While this system ensures that hospitals treat blood like an economic good, it is not entirely desirable, as it does not address the question of maintaining efficiency properly. This is since the lack of a proper market price for blood, created by the separation of the forces of supply and demand, means there is no real way of deciding whether the price charged for blood, relative to other medical inputs, is correct. At the same time, the lack of payment to donors means that the quantity of blood that could be supplied may be artificially limited, with consequent undesirable social effects being effected through the distortions that are imposed on the sourcing options available to consumers of blood. It is with these points in mind that this section looks at both how a system of payment for blood would operate as well as examines pertinent issues that deal with how payment and the altruistic provision of blood interact with one another.
i) The theoretical structure of a commercial blood system
If we assumed that a system of mandatory paid donation is to be introduced in lieu of an altruistic scheme, then one of the first and most important changes that is likely to be noticed is that there may be a marked shift in the attitudes and behaviour of many of those individuals who currently donate blood for free. While some of these donors may continue donating blood, it has been speculated that many other donors may no longer wish to continue giving blood and will, as a result, withdraw from the donor pool. This observation has been borne out by a recent survey of blood donors in New Zealand, where only unpaid donors are used, which found that a considerable percentage of respondents would no longer give blood if they were informed by their local blood bank that it was to introduce a payment scheme [1].
There are various possible reasons why unpaid donors may have a negative attitude towards paid donation and would no longer give blood if there is a change in system. One plausible explanation is that some donors may no longer receive a Kantian benefit if they are to suddenly stop giving away their blood for free. Rather, they may start to believe that they are exploiting the misfortune of others by engaging in an opportunistic act that no longer has any moral value. This is because even though the act of drawing blood remains the same, the intention behind the act, as it appears to the donors, may be judged to be very different now, as their opportunity to be altruistic is effectively withdrawn. It is because of this belief that Titmuss felt that the introduction of a market in blood would deprive altruistic donors of “their freedom to choose to give or not to give” [2]. This point was, however, countered by Arrow, who asked why altruistic donors should “be affected by the fact that other individuals receive money for their services” [3], as there is no particular reason why the “creation of a market for blood decreases the altruism embodied in giving blood” [4]. In response to this rather obvious assessment, one author argued that the introduction of payment forces people to redefine the conception of their interests, as their opportunity to act in solidarity with others is now substantially reduced, for what was previously seen as desirable free giving is now an undesirable act of self sacrifice [5]. This statement unfortunately overlooks the basic underlying point of the Kantian motive for engaging in charity, which is that people should only engage in an act if it is inherently good, without paying attention to what other people were doing. If donors were truly altruistic, they would not even reconsider their motives for donating, for if free giving is good in an unpaid system, then surely it must be just as good (or even better) in a system where everyone else expects payment for performing a similar act.
More important than this factor in explaining the dislike of payment is that there appears to be a relationship between the income of donors and the type of donation structure that they desire [6]. As was mentioned when looking at the reasons for being altruistic, acts of charity, including the giving of blood, may be viewed as a form of conspicuous social consumption by a person who wishes to publicly demonstrate that he can dispose of resources without needing compensation to do so. In our case, unpaid donation is likely to be favoured by the wealthier sections of society, who can afford to give blood for free, whereas paid donation may be preferred by people from lower socio-economic groups, whose lack of wealth suggests that compensation may be favourably considered. From this difference, we can assume that while payment may be an incentive for poor people to give blood, to relatively wealthier blood suppliers, it may actually prove to be a major disincentive to donation. The reason is that to wealthier people, who may be accustomed to giving blood freely, the act of voluntary unpaid donation may have a virtuous aspect that they feel reflects the proper behaviour of a respectable citizen, while the selling of blood may be viewed as having a mercenary taint that is only suitable for lower class members of society [7]. By suddenly changing the donation system, any distinction that exists between social classes may be wiped out, with richer donors no longer being given an avenue to make an impression on others.
This hypothesis about income status is borne out by a casual examination of the link that exists between the type of blood collection system adopted in a particular country and its per capita income – while unpaid donation is the norm in wealthy, developed economies, in most developing nations, the payment of donors is the more frequently practised way of collecting blood. A similar, admittedly weak income link appears to exist in those countries, such as the USA, where both paid and unpaid donation coexist, with paid donors very often being from poorer segments of society while donors who give blood for free generally have wealthier backgrounds.
Due to the divergent attitudes that exist towards paid donation among people from different income groups, it would be impossible to determine, ex ante, how many incumbent donors would drop out of the current altruistic blood donation programme if it was to be replaced in its entirety by a system of paid donation. At the same time, it would be impossible to ascertain the extent to which they would be replaced by paid donors, as the willingness of people to sell blood would depend on a host of factors, such as the level of payment on offer for blood and their price elasticity of supply. To overcome any difficulties that may arise because of this, a compromise solution that caters to the specific needs of different donors may need to be adopted, with the most feasible option being the introduction of a dual system that allows for both paid and unpaid blood donors to be used in the provision of blood. If each collection system was to operate independently of the other and target donors with unique characteristics from different income groups, then supply could be maximised, with each system operating as a complement, rather than as a substitute, to the other. While the crossing over of donors may occur, especially if some currently unpaid donors now wish to receive payment for their blood, it is likely that the use of a mixed system will succeed in convincing almost all unpaid donors to continue giving blood for the same altruistic reasons as before, while at the same time leading to the creation of an entirely new class of paid donors.
To understand how a dual system of blood collection would operate, we must look at the impact that the introduction of pricing would have on the amount of blood supplied by both the representative blood donor and by blood donors on aggregate [8]. In Figure 1, we look at the average number of blood donations that could be provided at different prices in a year by a single person. The supply curve of unpaid donors would be represented by the vertical line, SA, which is obviously price inelastic as they are in no way affected by any change in the price offered for blood. The quantity of blood provided in a year at a zero price by the average donor is shown by 0QA, with the maximum quantity that can be provided in a year by any donor (whether paid or unpaid) being set by the blood bank at 0QM [9]. If altruistic donors are, on average, to increase their annual donation rate, then the only change that we should expect to notice is a shift in SA to the right, with this movement only continuing for as long as these donors give less than the allowed limit (as they will not be allowed to exceed 0QM).
Figure 1 – Supply functions of the representative blood providers
Price SA SP
PM
PL
0 QA
QM
Output
The supply curve for paid donors is shown by the kinked curve SP, which has a positive slope that becomes vertical once line 0QM is reached. At a price of zero, the supply of blood from paid donors will obviously have to be zero (otherwise they would be altruistic donors), with some positive payment having to be on offer for them to give blood. While it could be argued that these donors would be willing to settle for any payment marginally greater than zero (thereby allowing for curve SP to start just above the origin 0), a more reasonable assumption would be that the representative paid donor would require some minimal, yet significant, fee to compensate him for the opportunity cost and possible discomfort that he may incur while donating. Thus, we allow for the initial payment to commence at PL for donors to start selling their blood, with prices having to steadily rise in order to motivate them to give more blood, until eventually, a maximum payment of PM is offered for sellers to provide the maximum limit of 0QM in a year. Thereafter, any increase in price offered will have no effect on increasing supply, as the maximum possible quantity of blood will be provided, with the supply curve for paid donors too becoming perfectly inelastic with respect to price.
Figure 2 – Market equilibrium with different blood collection systems
Price
SA (Altruistic Supply)
P1
Z
SP (Commercial Supply)
P2
E
ST (Total Supply)
P3 Y ET
Demand
PL
0
QA
X
QP
QE
Output
While the Figure 1 shows only the amount of blood that can be supplied by individual donors, it tells us nothing about the amount of blood that can be collected from an entire donor pool. In Figure 2, we see how much blood, in total, could be acquired by a blood bank at different price levels, for even though there is a limit to the number of units that individual donors can give, it is possible for blood banks to increase the total volume of blood they collect by convincing new donors to appear at donation sessions. Assuming that the introduction of a payment scheme does not deter any unpaid donors from continuing to give blood or convince them to switch over and become paid donors, we can allow for our total altruism based supply curve, SA, to remain unchanged at its current location. In addition, we can also create a supply curve for paid donors, which we denote SP. As we can see, this curve rises since greater quantities of blood will be provided by donors as long as the price that can be charged increases, with the incline depending on the price elasticity of supply for blood. As price rises, not only are blood banks able to get more blood from current paid donors, but they will also be able to get blood from new donors, who are tempted to start giving at higher price levels as well. If we were to sum SA and SP, we would then be able to derive a third curve, ST, which shows the total amount of blood that can be provided at all price levels by both types of donor [10].
We can, of course, go even further and find the equilibrium price at which blood is to be bought if different systems of collection are in operation, simply by looking at the interaction between the different supply curves and a blood demand curve D [11]. If only altruistic donors are used, then SA intersects with D at a price level of P1, with 0QA units of blood being provided. However, since these donors are obviously unpaid, the price that blood banks actually pay for the blood they process is zero, with the entire value of the blood collected being the rent that they receive from their activities (shown as rectangle 0QAZP1). In a market where only paid donors operate, the intersection of the demand curve with the paid blood supply curve would be at E, with 0QP worth of blood being exchanged in a year at an equilibrium price of P2 per unit. In this market, the rent (or supplier surplus) that would accrue to the paid donors would be represented by the triangle PLP2E. In a dual system where both types of donors are used, equilibrium would be reached later on at ET, with the price of a unit of blood being set at P3. At this equilibrium location, we would find that of the total quantity of blood of 0QE that is supplied, 0X would have been derived from paid donors and XQE would have come from the unpaid donors. In this particular situation, the total rent that would have been made available would have been the sum of triangle PLP3Y and rectangle ETQEXY.
ii) Practical aspects of a commercial blood system
Now that we have seen how a dual system of pricing could operate to balance blood demand with supply, it would be worthwhile to consider a range of issues that might be of interest as the infrastructure and operating policies of the new blood system are developed and implemented. While altruistic blood banks could expect to operate in conditions that remain largely unchanged (except for working harder at retaining donors and staving off the new competition), commercial blood banks will be likely to face a variety of constraints and obstacles as they recruit and employ donors. Although many of these challenges are of a general nature and are likely to be addressed in the course of conducting normal business, there are some points associated with the concept of paid blood banking that should be covered in greater depth.
No comment can be passed as to what the actual price of blood is likely to be in real life as this would depend on actual market forces. However, it would be safe to say that if we were adjust the fees paid in the 1960s to South African donors for inflation, we could expect the price of a unit of whole blood to be in the region of R150 to R200. As we know though, whole blood is not a homogenous commodity due to the various groups that exist, so it would only be reasonable to expect that different types of blood would be valued differently. In particular, we could expect O group blood to command a premium over other blood types due to the fact that it can serve as an universal substitute, while blood that is in excess supply could expect a lower price. One complication that has been noted is that donors with blood from rare groups may be able, in an emergency, to command a “monopoly” price for their blood that exceeds what they would normally receive [12]. While price controls and attempts at moral suasion have been advocated as solutions for getting around this problem, other, more appropriate, approaches that can be used involve either using new technologies to store such products for when they are urgently required or covering such eventualities in the contracts that are entered into with donors.
One measure that may be useful in ascertaining whether the optimum price is being offered to donors is the price elasticity of supply, which looks at the effect that a change in price has on the amount of blood that sellers are willing to provide. Here, blood banks can be said to offer donors the correct level of payment if, on aggregate, any percentage change in price offered is matched by exactly the same relative change in blood quantity offered. If the percentage increase in quantity supplied exceeds the equivalent rise in price, then donors are being offered too much for their blood, but if the percentage increase in supply is lower than the percentage price rise, then the price offered is not high enough and should be raised further. While these suggestions provide us with some theoretical guidance as to how the pricing policies of commercial blood banks can be structured, as no proper studies have ever been conducted to explicitly determine how changes in price for blood actually cause changes in the amount supplied, we will only know what the price-elasticity of blood suppliers actually is once a payment scheme is actually underway and blood banks work their way through this problem.
As was previously noted, altruism and payment are concepts that are not compatible. Thus, if a person is to receive even the slightest token payment for giving a unit of blood, purists may feel that defining him as being charitable is wrong as he is technically selfish, even if the benefit received is minimal. This is, however, a fallacious argument, for as we saw before, it is possible for a person who is motivated by charitable intentions to perform a particular deed to nonetheless expect to receive some benefit, no matter how symbolic, for performing this act. This logic can, in a modified manner, be applied to the scenario of blood donation, where different people may expect to receive different levels of payment for their blood according to their degree of altruistic desires, with altruistic donors being under no obligation to accept any payments that may be offered. Consequently, the conclusions of surveys, such as that from New Zealand, that find that altruistic donors might desist from giving blood if payment was offered can be misleading, especially since various mechanisms can be introduced to meet their unique needs and permit them to remain unpaid.
If donors do not wish to keep any payments that are made to them, they can simply transfer their payments to a charity of their choice, which ensures that they will be free to say that they themselves received no financial rewards. Alternatively, if donors wish to ensure that blood recipients do not have to pay for the blood that they have provided, then a neat solution that can be adopted is to allow all donors to decide what percentage of their donation fee is to be paid to them, with the remainder being retained for what can quite literally be called a blood recipient fund. The money allocated to this fund can then be used to deduct the initial donor payment from the final price of the relevant blood product, so that all that recipients need to pay for are the handling and processing charges of their blood products [13]. An advantage of this mechanism is that it would allow us to implement the price discrimination theory of charity to blood collection, so that even though the market price offered for blood could remain identical for all donors, the price which individual donors eventually sell their blood for could vary according to how altruistic or selfish they are. While totally selfish donors would obviously accept the full market price, complete altruists would accept nothing, with those who have are motivated by a combination of both factors would accept an intermediate price that they felt comfortable with.
To demonstrate how this system would work, we use the methodology of variable altruistic behaviour discussed before and apply it to a hypothetical situation where the market price for a unit of blood is set at R100 (i.e. A=R100). Professional donors, who are motivated purely by financial reasons, would provide blood for exactly R100 (=D), so the value of their gift to the fund would be zero, as A-D=R100-R100=R0. On the other hand, fully committed altruists would only donate blood for free, so D=R0, with the value of their gift standing at R100, which is a full refund of the market value of their blood (as A-D=R100-R0=R100). For all other donors, the degree of altruism would be inversely proportional to the payment they accepted. For example, blood donors who accepted a payment of R20 would be 80% altruistic, while those who accept R80 are only 20% altruistic.
We must also determine what entities should be allowed to participate as commercial blood banks. While advocates of free economic enterprise may feel that entry into this market should be open to all interested parties, this is unlikely to be a realistic or attainable approach due to various clinical, legal and economic factors. Rather, a more appropriate solution would be to ensure that commercial blood banks meet certain basic criteria before being allowed to operate in this market, in the same way that skilled individuals, from barbers to physicians, must meet certain minimum standards before being permitted to operate in a specific field. While this approach may be considered less than optimal by restricting the possible degree of competition, it may nonetheless be desirable if it results in an improved use of available resources and leads to increased consumer confidence in the safety of available blood stocks.
Ideally, potential blood banks should have a track record when it comes to handling blood or other biomedical products, in order to soothe public fears over the quality of the blood they are to receive. Pharmaceutical firms may express an interest in the commercial collection of blood components, in particular of plasma, due to the wide range of value enhancing products that this raw material can be used to produce. Alternatively, major end users of blood, such as hospitals and other medical centres, may express an interest in setting up their own blood banks, where the main types of blood product that they use could be collected and processed internally while specialist products could be obtained from other more general blood banks (in exchange for cash or raw materials in the guise of collected blood components). One final option would be to allow the entrenched blood banks to open up separate commercial operations independent of their altruistic division but which would use their processing facilities and expertise to collect and handle blood (albeit at different donation sessions and locations). The problem is that this approach may be unworkable if it leads to competition between the two arms as to the use of resources and the recruitment of donors, with each division obviously trying to poach donors used by the other.
Obviously, there is a likelihood that firms with no experience in dealing with blood will also try to enter this industry, which could lead to fears that attempts to undercut competitors and make profits could lead to a decrease in blood quality standards. However, it is unlikely that this would happen, as blood would continue to be a regulated product like any other pharmaceutical product, with strict conditions governing its utilisation and management. Here, any firm that attempted to knowingly pass off contaminated blood products would not only risk losing market share to competing organisations that could satisfy buyers that they could provide safe, high-quality products, but it would also be liable for vast legal damages. Thus, cheating, by selling tainted blood, would not be a profit maximising strategy for a commercial blood bank. On the other hand, competition between blood firms could lead to new discoveries relating to the nature of blood, for as was previously mentioned when discussing the efficiency of firms in the plasma sector, each new innovation that benefited human patients was also seen as an opportunity for making profits.
One of the principal issues that must be addressed concerns the identification of those people who should be considered by the commercial blood banks as being suitable for inclusion into their donor pools. While an appeal to the general public to come forward as donors and be paid for their blood may result in a rush of potential applicants, a better approach to this form of random selection may be for blood banks to concentrate their recruitment efforts on specific sectors of society. By doing so, they may be able to choose donors from only those groups whose characteristics indicate that they have potentially good blood to offer, while being able to exclude individuals from groups whose health or behavioural features provide signs that they are likely to give lower quality blood. While this method of cherry picking is relatively crude, in that it may lead to the incorrect initial selection of some people based simply on their meeting certain predefined criteria, it is still worth using as a starting point in that it may give commercial blood banks an advantage over their altruistic counterparts, in being able to use donor quality, rather than donor intentions, as the initial criterion by which to select aspirant donors. Listed below are some of the possible groups that may be targeted by commercial blood banks for inclusion into their donor pools, along with reasons why they may or may not be considered suitable as paid blood donors:
1) Military personnel: In many countries, military personnel were used as donors, for not only did their good health allow them to give blood regularly, but their concentration in barracks meant they were easy to recruit and handle in large numbers [14]. In South Africa, any commercial blood bank that considers recruiting these donors faces a couple of potential problems that may mitigate against any substantial reliance on their services. First, if the allegations of some anecdotal press reports are to be believed, poor conditions, high risk occupational hazards and widespread promiscuity have resulted in a significant number of soldiers being infected with HIV, making them ineligible to sell blood. As such, the number of military donors who can be considered fit to provide blood may be less than is expected. The second impediment is that the government may oppose the explicit recruitment of these donors if it results in them being unavailable for military service due to the suffering of any donation induced side-effects, or if they are held to be working in breach of their contracts.
2) Prison inmates: While prisoners have sometimes been used as blood donors, most blood banks, including those in South Africa, avoid collecting blood from such individuals, as prisons are often viewed as breeding grounds for diseases such as hepatitis and HIV. This is because not only are prisoners more likely to have low socio-economic backgrounds, where the incidence of disease is greater, but they often display high-risk behavioural profiles within prisons, such as being involved in acts of violence or engaging in homosexual activities or drug abuse. Despite these unfavourable attributes, prisoners have some features that may result in blood banks seriously considering them as paid blood donors. As prisoners are confined within enclosed locations, not only are blood banks able, within limits, to monitor their behaviour, but they can also use their collection equipment on a large number of prison donors in an intensive, high yield manner. In addition, as their opportunity costs are low, given their lack of alternative income earning opportunities, it may be possible to collect blood from prisoners at relatively low cost. Furthermore, many potential health hazards posed by prison blood may be minimised through the use of risk management techniques. For example, only white collar criminals or those from low security prisons might be recruited to sell blood, or only those blood components that are less likely to be affected by disease and which can be rendered safe through the use of neutralisation techniques may be extracted from prison blood sellers.
3) Students: Students form a core segment of the present donor pool, as their general good health means they are often willing and able to volunteer as donors for altruistic blood banks. In addition, as they are found in large numbers on campuses, not only are blood banks provided with convenient locations in which to collect blood from their current student donors, but they are also given an ideal recruiting venue to come into contact with other students who may express an interest in selling blood.
On the negative side, several particular difficulties arise with the use of student blood donors. One major problem is that blood banks have a relatively limited time-span in which to collect blood from these donors, for while they may be able to give blood while studying, once they start working after graduation, they very often drop out of a donation programme due to new pressures and constraints. A second drawback concerns the change that takes place in the general lifestyle behaviour of students – even if they do not actually pick up any infections from sex or drug taking, students still risk being excluded by blood banks due to the deterioration that takes place over time to their risk profiles. Finally, impressions gathered from elections and similar activities around the world suggest that students - and youth in general - have a high degree of apathy towards many communal activities, and are no longer as willing as their predecessors to partake in activities that used to be seen as desirable. Even when they do get involved in extra-curricular work, students may have a preference to engage in roles that are of a non-blood nature, as the range of charitable options that have opened up to them has grown considerably in recent decades.
Nevertheless, commercial blood banks may find that students can prove to be good candidates as blood sellers due to both medical and financial factors. As many students have no reliable source of income, they may have a low opportunity cost of donation, which suggests that they may be willing to provide blood on a regular basis at a reasonably low price. This is since any income gained, no matter how low it appears to outsiders, could still be sufficient to compensate them for any costs that they could expect to incur from their selling activities. In particular, they may be well suited as plasma donors, since this activity enables them to receive a regular income each week, which may be preferable to the less frequent payments associated with the selling of whole blood.
4) Office and factory workers: As with students, these people form an important part of the donor pool of altruistic blood banks, who are thus likely to oppose any efforts that may be made by their commercial counterparts to recruit them. If workers are to actually donate blood during office hours, then two sets of payments may need to be made, for not only must the actual vendors be compensated for their blood, but a payment may also need to be made out in favour of their employer, not only for the lease of its space and facilities, but also to cover any lost production and associated expenses that it may incur while allowing its workers to donate blood during office hours. Hence, using such people during office hours may not be desirable or effective, as the lower supply of whatever the employer produces can still have a distorted social impact through the higher prices that may arise for all the goods and services that utilise their initial good. If, however, these donors are used to give blood after normal working hours, then such problems are not likely to exist, with such donors having the potential to be highly dependable providers of blood.
5) Religious organisations: Religious bodies, such as church parishes, that wish to raise funds for specific objectives, such as building new facilities, may enter into an agreement whereby they will be paid a set amount of money if, through their members, they provide an agreed upon quantity of blood to a commercial blood bank. Such an activity is of benefit to all parties concerned: the church (which receives a tax-free donation from the blood bank); the blood bank (which is provided with good quality blood); and the parishioners (who are given an opportunity to demonstrate their altruism in a non-traditional manner). While this form of donating may seem unfeasible, it has actually taken place and been found to work before – in the USA, churchgoers in small mid-Western towns sold high-quality blood to hospitals based in large cities, including the prestigious Mayo clinic [15]. This type of activity can be extended in a similar manner to other organisations as part of their charity functions where, in return for receiving blood from employees who take part, a commercial blood bank will direct the relevant monetary payment in the form of a donation to a charity appointed by the firm. Unfortunately, the problem that persists with this form of charity is that donors who are perceived to be healthy may continue to face some form of coercion to donate even if they do not wish to do so, although the main difference between this case and that of altruistic donation as it currently exists is that some charitable organisation other than a blood bank stands to benefit financially from the donation of blood.
6) The poor: People who are unemployed or who come from low-income neighbourhoods provide an obvious pool of potential blood donors. Here, the income they can earn from selling their blood can serve as a valuable supplement to their otherwise meagre earnings, with their large numbers and high-income elasticity of supply suggesting that they are able to provide substantial quantities of blood.
Despite this, commercial blood banks are likely to face some enduring arguments over the value of using these donors. One criticism that has been mentioned before is that poorer donors may be tempted to give blood more often than they should, and thereby endanger their health. As was pointed out in the previous section though, there is no reason to suspect that this may happen except in some isolated cases, especially since a variety of monitoring measures and safeguards can be instituted to stop this from happening. Another possible argument that might be mounted against using these donors is that due to factors such as bad living standards and sanitary conditions, the poor are more likely to contract and transmit infectious diseases to other people. The response to this point is that not only will all blood continue to be screened and neutralised against infectious agents, but there is no reason to expect that commercial blood banks would not use common sense and avoid recruiting poor donors from slums and other areas where conditions do not meet acceptable minimum standards [16]. Finally, critics such as Titmuss have charged that blood banks will be guilty of exploiting the poor, as they will have acquired blood from people who are least able lose it, with the only beneficiaries of a market being the rich. This is a debatable assertion, with one commentator noting that “Titmuss preferred a British regressive system to an American progressive one” [17], for as a cursory examination of those who currently use medical services and products, including blood, is likely to show, consumption if skewed in favour of the rich, who are better able to afford such goods. Thus, while in an altruistic system any transfer of blood resources that takes place is from the poor to the rich, if a payment system were to be introduced, this flow would stop, to the benefit of the poor, who would finally receive something from the rich that was previously provided by them for free [18].
As commercial blood banks may have to choose between using either “amateur” donors, who give blood on an ad hoc basis when they need money instantly, or “professional” donors, who supply blood on a regular basis, the type and duration of contract that can be established is also worth examining. Of the choices available, the employment of “amateur” donors, who are more suited towards selling blood in the short term, is likely to be the less desirable option, for even though their desperation for money means they may be willing to accept a lower payment, they are more likely to impose higher per capita costs on a blood bank that recruits and manages them. In addition, their relative inaccessibility and lack of a donations track record means that measures to monitor their behaviour may be harder to successfully implement, causing the contracting blood bank to face a greater exposure towards engaging in acts of moral hazard whereby it employs donors with lower quality blood.
Consequently, a more desirable choice would be to employ “professional” donors. Here, a long term relationship can be established through a contract whereby the donor agrees to provide a blood bank with a predetermined volume of blood, with purchases being made conditional on the buyer being free to cancel the contract at any stage should the seller be found to engage in high risk activities or have unsafe blood. This contract could be of mutual benefit to both blood banks and vendors, for while blood banks are assured of having regular suppliers whose behaviour can be consistently monitored with relative ease, sellers are guaranteed a steady, dependable income as long as they maintain their health status and meet the terms that were agreed upon. Thereafter, should the initial contract have reached its conclusion to the satisfaction of both parties, they could negotiate a new, longer contract, with the donor possibly receiving a greater fee per donation in acknowledgement of his previous good service and as an incentive to continue in good health, while at the same time, the average costs of the blood bank could decrease due to the constant use that is made of the donor.
There are several ways in which the payment to blood donors can be structured, for while payment in full after each donation session may be the easiest option to follow from an administrative point of view, it may not be desirable when engaging in a long term donation contract. Rather, it may be preferable to provide the vendor with some form of financial incentive to abide by the terms of the contract and remain healthy as well as provide all the units of blood agreed upon (thereby weeding out “amateur” donors who intend dropping out after a few sessions). One possible payment structure is to pay the donor a set percentage of his fee after each donation is made, with the remaining portion being retained in custody by the blood bank. Once the contract has been completed, then the retained payments will be paid out to the donor as a lump sum payment [19]. Alternatively, we could use an income stream approach similar to the one used by some franchising operations to ensure the loyalty of their business partners. With this method, donors are paid a variable yet rising amount of money after each donation, with the weighting of the increase being progressively larger so that the final payment made is worth more than double the value of the average of all payments. The purpose of this method is to force blood sellers into making a long-term commitment to the blood bank, because while the payments in early sessions will be of such low value as to barely cover their time and effort, the latter payments will be of such great value that they will serve as an inducement to continue donating and make a worthwhile profit in the end.
The type of compensation to be given to blood vendors is also of interest. While cash payments are convenient and may be acceptable to most sellers, to some people, compensation of this form may carry an undesirable stigma (especially if they previously were altruistic donors), so to overcome this issue, alternative forms of compensation can be offered to suit the specific requirements of such sellers. Probably the best alternative is to provide them with a voucher, holding approximately the same nominal value as the cash fee, that is redeemable at a specified retail outlet such as a chain store, cinema or cell-phone network. Otherwise, a voucher booklet worth smaller denominations redeemable at a range of different stores might be given, with the aggregate value of the booklet being higher than that of the single voucher payment, as not all available vouchers are likely to be used. To facilitate their use, these vouchers should be made transferable to whomever the blood donor chooses, although they should also have a limited period of validity from the date of issue attached to them in order to serve as an incentive for the donor to return and give blood again. More specific types of compensation can also be created to meet the needs of certain donor groups. For example, as part of their payment, university students who donate blood to a blood bank run by their medical school may have part of their fees paid off, as a kind of pseudo-bursary, or they may be provided with a limited amount of care by the university medical services (which would benefit the blood bank as well, since it could actively monitor the health of its donor pool) [20].
Having examined general issues of how a commercial blood service could operate, in the section that follows we can examine how the blood donation system in South Africa could be restructured in order to allow increased supplies of blood to be acquired for use.