Blood transplant slowdown a challenge for Minneapolis-based Be the Match

After Be the Match moves into its glassy new headquarters near Target Field in November, people headed to the popular North Loop neighborhood won't be able to miss the huge nonprofit's name.

The new home is a crowning achievement for the registry of stem cell donors, but the move comes as the organization is struggling to contain costs amid a slowdown in the number of blood transplants being performed. In June, it quietly laid off 50 employees in an effort to lop off about $18 million in expenses.

It's a historic shift for the Minneapolis-based nonprofit. In an interview, Be the Match CEO Dr. Jeff Chell characterized the financial situation as a "rough patch" that would have been worse if the organization hadn't reacted quickly. It's the first time in his 15 years running Be the Match that he's had to lay off people, he said.

"This is an unprecedented and hopefully never-again incident for the organization," Chell said.

The 50 employees — many of them middle managers, about half in the Twin Cities — represent 5 percent of Be the Match's post-layoff workforce of 950. Chell said there are no plans for more layoffs.

The nonprofit has come a long way from the 1980s when the donor registry got its Minnesota start around a table at the Red Cross in St. Paul.

From there, the National Marrow Donor Program and its Be the Match registry grew into a $386 million powerhouse. Its database of more than 12 million donors can, in just minutes, match people with leukemia and other blood cancers to potential unrelated donors whose blood has the right protein markers, and rank them. It operates one of the largest repositories of adult blood cell samples in the world.

As a result, fees from transplants — its main source of revenue — ticked down. Profits of $14 million were down from previous years, too. Expenses meanwhile, have risen steadily.

Chell anticipates transplants to be flat in 2015 and decline slightly in 2016, creating something like the plateau Be the Match experienced in the late 1990s. Such transplants are flat globally, too, according to data from the World Marrow Donor Association in the Netherlands. These declines are due in part to an increase in family donors and alternative therapies.

Be the Match charges transplant centers fees for finding donors, arranging to collect the blood-forming stem cells and then delivering them to the patient's doctor. The centers pay Be the Match from insurance.

The transplant slowdown follows other challenges in recent years. Be the Match is still wrapping up a lengthy and rocky IT revamp that has cost at least $67 million. And it suffered embarrassment after hiring CFO Subramanian "Kris" Krishnan in 2011 only to have the Securities and Exchange Commission charge him with securities fraud related to overseas expense reports at his previous employer, Digi International.

Krishnan left Be the Match in early 2013; the SEC case was settled and Krishnan ordered to pay $60,000.

Be the Match's new digs will increase yearly rent from its current $3.9 million to $4.4 million. United Properties, which developed and owns the building, is selling it to State Farm, Chell said. But Chell sees benefits from Be the Match consolidating its two Minneapolis offices into one spot that's more attractive to future, younger workers.

Its warehouse where millions of blood samples and cotton swabs holding cells swabbed from inner cheeks are stored will remain in New Brighton.

The alternatives for treating blood cancers have expanded in recent years. That's terrific news for patients, but many of the approaches don't require Be the Match.

The key change, Chell said, is a rise in transplants using the blood cells of relatives who are a half-match. There are also more transplants using a patient's own cells, and new drugs, such as Imbruvica, that don't involve a transplant at all.

Suffering from a type of lymphoma, Bloomington resident Greg Shields started taking Imbruvica last year after an earlier stem cell transplant failed. Shields, who's being treated at the University of Minnesota Medical Center, called the new drug a "miracle" that has shrunk his lymphoma. He isn't cured, but the retired medical equipment salesman is riding his bike again and plans to hike part of the Superior Trail with his wife next month.

His doctor, Dr. Daniel Weisdorf, director of the adult blood and marrow transplant program at the University of Minnesota, said better and simpler therapies for blood cancers will dent Be the Match's business, but won't make it obsolete.

"The really steady rise over the last 10 to 15 years will slow," Weisdorf said. "I think that's what they're recognizing."

The Affordable Care Act, or Obamacare as it's widely known, is also affecting transplant numbers, Chell said, with some new insurance plans providing fewer transplant center options to patients than previous plans.

More important, he said, is getting Medicare to cover transplants for people over the age of 65. That's important because the most common age group for blood transplants is now over 50. It also needs to diversify its donor base because people of color with blood cancers have a much harder time finding a successful match.

Chell insists that Be the Match's basic model is not going by the wayside. At any given time in the United States there are 14,000 people who need a blood transplant.