I would like to set the record straight about "Red Cross wonder woman?" (Government, Jan. 25). The Red Cross has never been healthier, and 1998 was the best fiscal year in the organization's history, with $194 million net of expenses to roll into fiscal 1999.
Since 1991, when Elizabeth Dole became president, the Red Cross has raised $3.4 billion. Public support to the Red Cross, separate from $650 million of disaster relief and decreased United Way funding, has grown 174%--from $113 million in 1990 to $310 million in 1998--which is far more than the 10% increase in public support you reported.
The modernization of Red Cross Blood Services was initiated by Dole in 1991, two years prior to the Food & Drug Administration consent decree, which ratified her "transformation" initiative, placing timelines on the Red Cross and milestones against which to measure progress. Health & Human Services Secretary Donna Shalala and former FDA Commissioner David Kessler hailed the transformation as a success.
It is inaccurate to conclude that blood-banking competition resulted from efforts to recover modernization costs. Hospitals, operating under cost controls imposed by managed care, have spurred competition, to which Red Cross and independent blood centers have responded aggressively. Red Cross expansion has resulted from hospitals' recognition of our state-of-the-art system and demand for our products and services.
Red Cross biomedical operations are financially stable. We have managed our $1.3 billion biomedical expenses, nearly offsetting revenue for the past two years while continuing to invest in new technologies to keep blood safe. Red Cross absorbed significant business risk to bring to market plasma treated by V.I. Technologies [in Melville, N.Y.]. To date, Red Cross has realized no financial advantage by offering it to the public but remains dedicated to bringing safer products to market as soon as feasible.
As with any $2.2 billion corporation, the Red Cross utilizes consultants and seeks board members who can bring needed expertise to the organization. Contrary to your KPMG reference, the fees paid to auditors, lawyers, and other professionals amount to 5% of the total compensation, not the 50% reported. Your allegation that consultant Mari Will was added to Dole's personal staff is false. While many dynamic individuals joined our Board of Governors during Dole's tenure, the president of the Red Cross cannot unilaterally appoint members. Only the Red Cross Board, which includes eight appointees of the President, can elect the other 42 members.
Elizabeth Dole's tenure brought us: a transformation of blood services to the best system in the world, a transformation of disaster services, a rechartering of chapters for the first time in Red Cross history to meet high standards of excellence, the creation of a highly successful fund-raising operation to replace an almost total dependence on United Way, a new and more efficient field structure, and the initiation of a consolidated financial management system and the use of technology to modernize the organization's Armed Forces Emergency Services. If BUSINESS WEEK considers such accomplishments as these to be purely image-building, this organization would welcome more of the same.
Chief Operating Officer
American Red Cross
Editor's note: BUSINESS WEEK's 10% calculation was based on contributions from all sources, including United Way. On consulting fees, BUSINESS WEEK did misstate that consulting fees were half the total payroll. The KPMG study puts fees at 45% of payroll at two headquarters office units, not the entire organization. Mari Will did serve as a consultant to Elizabeth Dole over a three-year period.
Elizabeth Dole faces serious challenges if she tries to gain the Republican nomination for President in 2000. In addition to having never run for elective office, Dole's two Cabinet posts were not exactly high-profile. On the other hand, Dole has high name recognition, and she has shown she can raise large amounts of money for her causes.
If Dole takes the more likely path of running as the Vice-Presidential candidate with George W. Bush or someone else, she might have a shot for the top job in eight years, when she will be 71 years old. Whether she runs for President or Vice-President, Liddy Dole will be breaking a glass ceiling for Republican women.
George A. Dean