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Business Observer Thursday, Dec. 31, 2009 12 years ago

COVER UPDATE: Merging isn't easy

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Companies can often generate savings by merging with similar firms to benefit from economies of scale. But while cost savings are all well and good, Florida Blood Services has found that completing those beneficial mergers takes work.
by: Alex Walsh Web Editor

In May, we introduced readers to Don Doddridge, chief executive officer of Florida Blood Services, one of the largest blood testing and collection agencies in the country.

At that time, FBS had one major focus for improving its business model going forward: cost-cutting.

To obtain those cost savings, FBS acquired several smaller, local agencies to create economies of scale. Over the course of 2008, FBS had expanded from serving 38 hospitals in four counties to an area of 80 hospitals in 40 counties. And in April 2009, one more merger was completed, this time with Lakeland-based BloodNet USA.

Now, the company is ready to focus on the acquisitions its already made, rather than pursue others. Says J.B. Gaskins, vice president of marketing for the company: “Hopefully there will be no more talks of mergers.”

The companies and employees that FBS has already adopted need to be incorporated into existing systems first, and Gaskins says that process is especially difficult for the medical science industry.

“The learning curve is not like learning a new version of Excel or Word,” Gaskin states. He says the process is “much more cumbersome for staff.”
Gaskins expects the process of getting new employees onto the FBS network to be completed in February. At that point, mergers may resume, as cutting costs continues to be a top priority in the industry.

He also points out that, even while FBS may not pursue those additional mergers on its own, additional opportunities may present themselves.

In fact, that's what's been happening all along, as every one of FBS' mergers completed over the past 15 years was initiated by the smaller company.

Whether or not his company gets involved in additional industry consolidation, Gaskins believes the number of separate entities serving the blood testing and collections market will continue to shrink. He says that number has already decreased from 22 to nine over the past 20 years.

The company is also reorganizing the ownership structure of their laboratory facilities. In November, the company finalized a joint venture with Tempe, Ariz.-based Blood Systems Laboratories to create the second largest blood-testing lab in the country.

It all comes back to the overarching theme of the non-profit's successes: “We have to control costs,” Gaskins says. Now that FBS has made the moves to position itself for those cost reductions, its short-term future will depend on its ability to manage those numerous moves.

— Alex Walsh

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