Santa Rosa Memorial Hospital and Petaluma Valley Hospital are seeking a cheaper source of blood, threatening a 60-year relationship with Blood Bank of the Redwoods.
The blood bank, the only major blood center on the North Coast, announced Friday that the two hospitals have terminated its contract effective July 29 and are seeking competitive bids.
The two hospitals, which are operated by St. Joseph Health System-Sonoma County, are the blood bank's largest customers. Their $3.5 million contract accounts for 25 percent of the blood bank's annual revenues.
"This challenge will be one of the greatest we have ever faced; yet we have a bright management team and a dedicated board of directors who will create the best possible outcome for the community," blood bank president and CEO Cathy Bryan said in a statement released late Friday.
St. Joseph Health System gave the blood bank a 90-day termination notice April 29 and has opened the contract to bidding from other vendors. The bid is scheduled to be awarded June 6.
The hospitals decided to put the blood contract out to competitive bidding in an attempt to reduce costs, said Dr. Gary Greensweig, chief medical officer for St. Joseph Health. A preliminary analysis suggests that other Bay Area blood banks can serve the two hospitals more efficiently than Blood Bank of the Redwoods, he said.
"The primary driver of our decision is our responsibility to patients and their insurance companies to provide care and services to them at the lowest possible cost," Greensweig said.
"We have been assured by Blood Bank of the Redwoods that their costs are very competitive and that they expect to win the proposal process. Frankly we hope they do -- we really do. Should that be the case, we would enter into a new contract with them," he said.
The nonprofit Santa Rosa blood bank has submitted a bid to St. Joseph Health, blood bank spokesman Kent Corley said. The cost of its blood products is reasonable, he said.
"For Northern California blood pricing, we're right in the middle," Corley said.