In Florida, competition - and a blood feud

In February 1987, Dr. Peter A. Tomasulo and two other physicians associated with the American Red Cross blood bank in Miami received an unusual warning.

Unless they stopped making what a rival blood bank said were disparaging and defamatory statements to doctors, hospital officials and patients, "our client has instructed us to consider a civil lawsuit against you for substantial damages," a letter said.

It was written by a lawyer representing the Broward Community Blood Center in Lauderhill, Fla., near Fort Lauderdale. But Dr. Charles L. Rouault, the blood bank's president, freely acknowledges he was the force behind it.

A blood war is going on in South Florida.

"Dr. Tomasulo and I have been at war for years," Rouault said. "We have been competing in virtually every way one could compete in the blood-banking industry: supply, price, quality of service, range of services. There's not much more. "

It is a battle that in the last decade has spilled over to the board rooms and surgical suites of some of Florida's most prestigious hospitals, has divided school officials and companies and has left many of those involved angry and confused.

South Florida is one of only a handful of major metropolitan areas in the nation where blood banks compete. Economists and other observers say competition would be good for blood banks, leading to lower prices.

But what is happening here could cause second thoughts.

Some blood bank administrators say they are appalled by the rivalry in South Florida. "It's turned into a gasoline price war," said Norman Selby, who formerly ran the New York Blood Center.

The competition between Rouault and Tomasulo has caused hard feelings and forced people who deal with the blood banks to take sides.

"It's a mess," Rouault said. "The blood business down here . . . is the heart of darkness. "

Each blames the other for allowing the situation to get out of hand and wanting to put his rival out of business.

Tomasulo said Rouault had a "clear intention to increase market share" at his expense and had raided some of his blood bank's traditional donor groups.

Rouault countered that the Red Cross' South Florida Blood Services raided Broward's groups first, and complained that Red Cross has a "monopolistic mind-set. They want to operate a cartel. "

The two presidents locked horns again this year when Tomasulo requested permission from the Broward County school board to collect blood in high schools there. Rouault protested, arguing that he had spent years building up a successful program in the schools.

An arbitrator, Circuit Judge John A. Miller, scolded both in a February report that supported most of Rouault's contentions.

"There has been a long history of negotiations . . . to establish some kind of joint venture, but success has been thwarted by each wishing to control the other. . . . It's territorial rights. "

Therein lies the real story of this blood feud. What is ultimately at stake is control of a product worth millions of dollars.

"Leaving Broward and probably Palm Beach (Counties) would have a grave negative impact on our bottom line," a confidential Red Cross analysis prepared this summer said.

In 1988, South Florida Blood Services in Miami collected approximately 105,000 pints and had revenues of more than $10 million. A salary figure for Tomasulo was not available. However, a 1987 tax return filed by the Red Cross shows Tomasulo was paid $166,775 in salary and benefits.

Broward collected about 60,000 pints of blood in 1988 and had revenues of more than $5 million. Rouault was paid about $125,000 and had the use of a car provided by the blood bank.

Rouault contends that the Red Cross in Miami has invaded Broward and Palm Beach Counties because it can't collect enough blood in its home turf of Dade County to meet the needs of the 61 hospitals it serves. In 1988, it had to buy about 40,000 pints of blood, at a cost of $1.5 million, from other centers, according to Red Cross documents and interviews.

"If I couldn't collect enough blood . . . I would be embarrassed," Rouault said. "We have a healthy, financially viable operation here and I don't think Peter likes to be reminded of that fact. "

Tomasulo said his blood center has "made great strides toward becoming (self-) sufficient" in the last decade. "Miami is like a number of other urban areas. There are many challenges to collecting blood. "

Until July 1986, South Florida Blood Services was a private, nonprofit blood bank with no affiliations. But that month, Tomasulo and his board of directors agreed to merge with the Red Cross. The decision was prompted by many factors, including the competition with Broward, Tomasulo said.

As part of the merger, the Red Cross agreed to supply Tomasulo with blood to make up his deficits. Tomasulo, in turn, agreed to not buy blood from non- Red Cross blood banks, including Rouault's.

Following the merger, South Florida Blood Services cut its price to compete with Broward, improved its collections in Dade County and expanded its efforts to collect and sell blood in counties to the north - including Broward and Palm Beach Counties.

"Why they would want to sell blood here when they can't even meet their own needs in Dade is beyond me," said John H. Flynn, president of the Palm Beach Blood Bank in West Palm Beach. Flynn has formed an alliance with Rouault to fight Tomasulo.

For Rouault, the South Florida Blood Services and Red Cross merger was a nightmare come true. "We can compete successfully with Peter Tomasulo, but we can't compete against all of Red Cross," he said.

In 1986, Rouault began selling blood to hospitals in New York City and northern New Jersey to help finance his battle. Last year he brokered about 25,000 pints of blood, worth nearly $1.5 million.

Tomasulo and Red Cross management at national headquarters in Washington were not happy when they found out what Rouault was doing. Rouault said they ''tried to pressure some of the hospitals into not buying the blood. "

Tomasulo denied that charge but acknowledged calling at least one blood- bank director at a New York hospital. "We would like it (the New York sales) stopped because it provides them a tremendous economic advantage," he said.

More recently, a Red Cross official complained to the Internal Revenue Service that the Broward blood bank had refused to show him its tax return - as required by law. (Even though they pay no taxes, nonprofit blood banks file statements of their income and expenses with the IRS. )

"We drove up there and asked to see it (the tax return) and their administrator told us it wasn't there," said Michael G. Hunter, financial administrator for the Miami Red Cross.

"It's a natural course of doing business to want to know how your competition is doing. That's what I was doing. I wanted to know what is their

financial position, to make comparisons. "

Responded Jeffrey McNally, administrator of the Broward Community Blood Center: "We'd be happy to turn over our financial information if they would turn over theirs."