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.

There have been no problems with the quality of the blood supplied by Blood Bank of the Redwoods, Greensweig said. But other Bay Area blood banks may be able to provide a similar level of service at lower costs, he said.

Corley said he did not know where St. Joseph Health System would get its blood for trauma patients, heart surgeries or cancer treatment, but that it would have to come from outside the Sonoma, Lake and Mendocino area.

"We don't know what their intentions are or what their plan is," Corley said. "There is no other blood center closer than Sacramento or San Francisco."

The blood bank was established in Santa Rosa in 1949, a year before Santa Rosa Memorial Hospital opened its doors. It has provided a variety of blood products to Memorial for nearly 60 years.

"We think Blood Bank of the Redwoods has very high quality, has wonderful service. We also have enjoyed this 60-year relationship with the blood bank. That notwithstanding, we have an obligation to the community that our costs are in line," Green-sweig said.

You can reach Staff Writer Martin Espinoza at 521-5213 or martin.espinoza@