St. Joseph Health System, which runs Santa Rosa Memorial Hospital and Petaluma Valley Hospital, announced this afternoon that it has selected San Francisco-based Blood Centers of the Pacific as its new blood services provider.

The decision is a cost-savings effort on the part of Memorial Hospital and ends a 60-year relationship with the Blood Bank of the Redwoods. It also represents the loss of about $3.5 million, or 25 percent, of the blood bank?s annual revenue stream.

?The decision to change blood providers by St. Joseph Health System?Sonoma County truly is regrettable,? said Cathy Bryan, Blood Bank of the Redwoods? president and CEO. ?We will continue to provide the same excellent service as we?ve done for the past 60 years to all of our local hospitals and other communities in need.?

Officials at St. Joseph Health System have said that their ?per patient? cost for blood products at Memorial Hospital was 25 percent higher than at any of their other hospital facilities.

Tom McHugh, director of laboratory services at St. Joseph?s local facilities, would not say how much money the two hospitals will save by going with Blood Centers of the Pacific.

?It?s a significant savings but we?re not quantifying for the public how much it is,? McHugh said. ?We?re looking for a long-term collaborative relationship to hopefully drive down costs.?

McHugh said the local hospitals likely will partner with the San Francisco blood center in holding blood drives in the community.

In a statement released Monday morning, George Perez, president and CEO of St. Joseph Health System-Sonoma County, said ?rising, poorly reimbursed blood costs? led St. Joseph to ?choose a new supplier who can provide the same level of quality, safety and availability.?

The news was no surprise at Blood Bank of the Redwoods, whose relationship with St. Joseph Health System became strained last summer after the blood bank raised its fees to cover the cost of new blood testing.

Since the 1949 founding of the local blood bank, Sonoma County has remained free of the competitive forces that have altered the blood banking industry across the country in recent decades.