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The Funeral Business NPR's Jim Zarroli reports on the increasing consolidation of the funeral industry. Large funeral-home conglomerates have been purchasing smaller, local funeral homes and retaining the family names on those homes. The funeral homes that remain independent are worried about that consolidation. While ownership by a large corporation results in certain services being improved...such as bereavement counseling...costs are climbing and are threatening the smaller funeral home operators. Zarroli visits Cape Cod, Massachusetts, where the Canadian-based Loewen Group has bought out one of the village's long-established funeral homes as part of its acquisition plan. You can read the transcript: LINDA WERTHEIMER, HOST: In many places in the United States, the local funeral home is one of the most venerable businesses around. A factory or a department store may shut down, but the funeral home goes on and on, more often than not with a family name attached. Beneath the veneer of stability, however, change is underway in the funeral business -- big change. In recent years, a few conglomerates have been buying up previously independent funeral homes at a furious pace. NPR's Jim Zarroli reports on what happened on Cape Cod, where one company purchased nearly all the local funeral homes. JIM ZARROLI, NPR REPORTER: Hallet's (ph) Funeral Home in South Yarmouth, Massachusetts has the air of stuffy respectability that funeral homes everywhere seem to cultivate. It's a place of oriental carpets and tasteful seascapes, where the bereaved are enveloped in an air of studied compassion. Here, little details are important. SOUNDBITE OF FOOTSTEPS FRANCES WEBB, CO-OWNER, HALLET'S FUNERAL HOME: And around the corner here is the... ZARROLI: Co-owner Frances Webb stands in the doorway of an enormous room and points inside. WEBB: We have special lights up there, so everybody looks wonderful, which is unusual in funeral homes, actually. They're like red and blue lights so your skin looks better. And that's where I go when I'm feeling kind of pasty. ZARROLI: Hallet's was opened nearly four decades ago by local mortician Norman Hallet, who left it to his two daughters when he died. Today, a large photograph of Hallet hangs prominently in a downstairs corridor. Twenty years after he died, Hallet remains an important presence here, says Fran Webb. WEBB: He was really specific about how he thought people should be treated and -- for example, when somebody's coming to make arrangements, we're standing at the door 15 minutes before they come, so that we're there to open the door when they walk up the walk. He said it was very hard for people to come into a funeral home. So we still live by his little rules in other words, you know. It's important. ZARROLI: But as his daughters well understand, the $16 billion a year death care business has changed enormously since Hallet's day. Cremations and memorial services are in; limousines and long visiting hours are out. More important, independent funeral home such as Hallet's face a much different competitive landscape than they once did. Today, a handful of big conglomerates have bought up almost 20 percent of the nation's funeral homes and a growing number of its cemeteries and crematoriums. One in nine U.S. funerals is said to be performed by one company, Houston-based Service Corporation International. The conglomerates sometimes buy multiple funeral homes in the same city or town, giving them a big cost advantage over smaller homes, according to New York State Assemblyman Jules Polinetzky (ph). JULES POLINETZKY, NEW YORK STATE ASSEMBLYMAN: It's cheaper and easier to run 18 funeral homes by sharing car service costs, by sharing all the different costs -- than it is to run one funeral home. And so, the individual family home-owned funeral is having a harder time competing. ZARROLI: Analysts say the consolidation of the funeral industry has been driven in part by economics. As the U.S. population has aged, funerals have become something of a growth industry. One conglomerate noted in its 1995 annual report that baby boomers turning 50 represented what it called "a most receptive audience." With potential profits growing, conglomerates reportedly have paid on average $1 million for each funeral home they've acquired. Industry officials insist that consolidation benefits consumers. They say the conglomerates bring capital and professional management techniques that help marginal funeral homes survive. John Carman (ph), a spokesman for the National Funeral Directors Association, says consolidation also enables funeral homes to offer services, such as bereavement counseling, that they otherwise couldn't afford. JOHN CARMAN, SPOKESMAN, NATIONAL FUNERAL DIRECTORS ASSOCIATION: That would be very expensive and very difficult for maybe a firm that served, you know, 75 or 100 families a year. But serving 400 or, you know, 450 families might provide them the resources to be able to do something like that. ZARROLI: But critics say the conglomerates have hurt consumers more than they've helped them. Consumer groups complain that some conglomerates use unusually aggressive marketing practices. Father Henry Wasilenski (ph), of the Interfaith Funeral Information Committee, says he's heard of conglomerates making sales pitches in nursing homes, and even paying churches to steer business their way. Wasilenski also says that while consolidating means lower costs for funeral homes, those savings are rarely passed on to consumers. FATHER HENRY WASILENSKI, INTERFAITH FUNERAL INFORMATION COMMITTEE: The fact is that usually they raise their prices. In some cases, the prices double at a mortuary with no change in services. ZARROLI: And Wasilenski says that often has a ripple effect on independent funeral homes that remain in the area. WASILENSKI: When they come in and raise the prices, then other -- lots of other mortuaries just figure, hey, we might as well raise our prices, too. I mean, they're going up and the price is going up, so let's join the -- join the crowd. SOUNDBITE OF SEA GULLS AND TRAFFIC ZARROLI: The seaside towns of Cape Cod have become home to so many retirees lately that the roads can be choked with traffic even in late autumn. A few years ago, the Canadian-based Loewen Group came to the cape and began buying funeral homes. One company it purchased was Doan, Beale, and Ames (ph), owned by Robert Studley (ph). A 40-year veteran of the funeral industry, Studley was ready to quit running his own business, but his children weren't interested in taking over the company. ROBERT STUDLEY, FORMER FUNERAL HOME OWNER, EMPLOYEE OF LOEWEN GROUP: Did you ever have to pay withholding or pay the premiums for the medical insurance and things like that? It was a big relief off my shoulders to know that there was no problems, you know -- that I had a big company behind me that made sure that these people were gonna get paid. And there were a lot of headaches owning a business, there's no question about it. ZARROLI: But Studley did not leave the company after the sale. Instead, he went to work for the new owner and now helps Loewen acquire other funeral homes throughout New England. Such an arrangement isn't unusual. In a business that values tradition and continuity, the conglomerates retain the names and often the staff of the funeral homes they've purchased. In fact, the public can be unaware that its trusted local funeral home has changed hands. Studley notes that Loewen continues to provide many of the services Doan, Beale and Ames has always offered, such as low-cost funerals for infants and poor people. STUDLEY: What we're doing here today is basically what we always did, and that's what makes me feel -- feel good about the Loewen Group. ZARROLI: But consumer advocates say Loewen's arrival on the cape has also had a down side. Within a short time, Loewen had purchased all but two of the funeral homes in the mid-cape area and prices had gone up. Loewen officials say that happened only after the company had invested heavily in renovations and training for local employees. But critics, such as Art Kimber (ph), of the Memorial Society of Cape Cod were less pleased with the new landscape. ART KIMBER, MEMORIAL SOCIETY OF CAPE COD: We do become concerned when the market for a service that is as necessary as the funeral service is controlled by one entity. If there is a limit on competition, then the consumer has limited choices -- is not able to go and find the most economical service to satisfy the need. ZARROLI: The Massachusetts attorney general's office agreed, and ordered Loewen to sell off three of its eight funeral homes. Perhaps coincidentally, prices have now come back down somewhat. At Hallet's Funeral Home, Fran Webb says she is not afraid of competing with the conglomerates, noting that in a service industry, bigger is not necessarily better. WEBB: I just read a piece in the paper the other day -- everybody was wringing their hands over Home Depot. And somebody said: "let the little guys sharpen their pencils and they can win." It's a very good point. If you keep your nose clean and you do a good job, the little guy is going to come out all right. ZARROLI: Still, the conglomerates have deep pockets, enabling them to spend money in a way the independents cannot. That has meant tougher competition for the local funeral home that's long been a fixture on Main Street. For years, funeral homes have been among the most stable businesses around, providing a good living even when the economy slowed down. Now, as in so many other businesses, that is changing and funeral directors that can't adapt may find it tougher to survive. Jim Zarroli, NPR News, New York.
Dateline: Jim Zarroli, New York; Noah Adams, Washington, DC; Linda Wertheimer, Washington, DC Copyright © 1997 National Public Radio, Inc. All rights reserved. No quotes from the materials contained herein may be used in any media without attribution to National Public Radio, Inc. This transcript may not be reproduced in whole or in part, including any electronic download or any other form of copying or distribution without prior written permission. For further information please contact NPR's Office of the General Counsel at (202) 414-2040.  |
