THB, Banditos, Wayward and more confirmed for Cosmic Cocktail!

Even the funeral parlor now goes to the cemetery An industry changes when conglomerates arrive from out of state

THE BALTIMORE SUN

When it is completed in May, the new funeral home in Elkridge will have an old-fashioned red-brick exterior, four elegant visiting rooms, a 200-seat chapel and, for Colonial charm, candles in the windows. But the 25,000-square-foot building along U.S. 1 is a tradition buster because of its location -- amid the headstones and statues of a cemetery, Meadowridge Memorial Park.

The aim is to create a "one-stop" shop that will reduce the traditional hassle of making arrangements and persuade families have both funerals and burials there.

Providing such convenience is the emerging sales strategy of out-of-state conglomerates that are buying up family-owned cemeteries and funeral homes throughout Maryland.

"It's helpful to the families" at their time of loss, says Ralph DeStefano, general manager of Meadowridge's cemetery and funeral home.

"When the family experiences a loss, we'll give them more time to be together. The whole concept is the convenience of the family."

The idea is not entirely a boon to consumers. Cemetery officials say they haven't decided on prices. A spokesman for Service Corporation International (SCI) of Houston, which owns Meadowridge, says the company tries to keep prices low.

But industry analysts say conglomerates such as SCI typically boost prices and add new, more expensive services.

A June 1995 analysis of the industry by PaineWebber explains that people accept price increases because they tend to think little of cost at the time of bereavement.

"Funeral homes have been able to raise prices as client families want prompt, attentive service at their time of need," said Todd Berko, an analyst at PaineWebber. "Since the average person is involved in arranging a funeral only once every 10-12 years, there is little frame of reference as to pricing."

Over the past decade, three publicly traded companies -- SCI, Stewart Enterprises of Louisiana and the Loewen Group of Burnaby, Canada, near Vancouver -- have gone on a buying spree in Maryland. And in doing so, they have begun to merge two industries, cemeteries and funeral homes, that have long been kept separate in practice and in state law.

The change has attracted the attention of some Annapolis legislators who say that the law, which is generally more lenient toward cemeteries than toward funeral homes, needs updating.

"There is more of a crossover of cemeteries and funeral homes than ever before, and this industry is going the corporate route -- rather than small businesses that are family owned," says state Sen. George Della, adding that he will introduce a bill this session to increase regulation of cemeteries. "I'm not saying this good or bad, but it is different and deserves a legislative response."

Because of centuries-old concerns about the possibility of disease and contamination from dead bodies, Maryland has more severely regulated morticians, requiring licenses and maintaining a state board to handle complaints.

But, despite scandals such as the recent revelation of a double burial in a single plot at Maryland National Memorial Park in Laurel, cemetery owners have successfully fought increased regulation and licensing. Often, they portray themselves as old-fashioned small businesses with little more than tiny staffs and sturdy shovels.

The undertaker at Meadowridge doesn't fit that bill. Service Corporation International has more than 2,000 cemeteries and funeral homes spread over three continents and annual revenues of more than $1 billion.

SCI, which purchased 160-acre Meadowridge in 1985, has brought a Wall Streeter's acquisition mentality to Maryland, most recently buying five cemeteries in the eastern Baltimore area. And while independents say the cost of building new funeral homes is prohibitive, SCI constructed 29 between 1991 and March 1995, according to PaineWebber. At Meadowridge, the company is paying more than $2 million to construct the new building.

"They are buying cemeteries and building funeral homes because there is money to be made," says Mr. Berko. "Maryland is a growing market, and the company is looking to expand."

A California company, Forest Lawn, first built a funeral home on a cemetery almost 30 years ago, but the concept has been slow to reach Maryland. New Orleans-based Stewart Enterprises built the Baltimore area's first funeral home on a cemetery when it opened a mortuary at its Loudon Park Cemetery in the southwest part of the city last year.

Meadowridge is only the second in the area, though industry watchers believe that such arrangements will become more common in the next few years.

In SCI's case, the funeral home construction is part of a corporate strategy of creating "clusters" of funeral homes and cemeteries in the same metropolitan area.

Within each cluster, the company cuts costs by shuttling equipment and personnel between locations. The goal is to account for divine inefficiencies: while the death rate is fairly steady, a funeral home in given location may get one death on Tuesday, and 10 on Wednesday.

"We are looking at this new building as a site we will centralize from, that we will have staff and send them to other locations," Mr. DeStefano says.

SCI's offer to the independent funeral homes it purchases is very attractive. The company will pay a fair purchase price, retire the facility's debt and, in many cases, allow the owner to manage the funeral home at a good salary.

While it may update marketing strategies, SCI is loathe to change the facilities' names, because some families have been using the same funeral home for decades.

At Meadowridge, the funeral home will be named for and managed by Gary L. Kaufman, who owned funeral homes in Elkridge and Baltimore before SCI bought him out in April 1994.

"It was a very attractive offer," says Mr. Kaufman, 55, whose four daughters didn't seem interested in taking over the business. "And I said to [my wife] Judy, 'This may be the chance of a lifetime.' "

Mr. Kaufman's other funeral home in Elkridge will remain open as long as it is still attracting customers, he says. But Mr. Kaufman believes the growing population in the Route 1 corridor may naturally gravitate toward Meadowridge, which sits on 1690 land grant property that was known as Hollywood Farm before it became a cemetery in 1935.

"This is going to be a beautiful funeral home," says Mr. Kaufman, who has been in the business since he was a teen-ager.

"You're going to have to wait to see how people react, how quickly they come in. But I believe we will be successful."

The companies

+ Service Corp. International

Headquarters: Houston

1994 sales: $1.2 billion

1994 earnings: $131 million

Operations: 2,631 funeral services locations, 250 cemeteries, 137 crematoria

Shares outstanding: 98.38 million

Exchange: New York

Friday close: $43

Stewart Enterprises

+ Headquarters: Metairie, La.

FY 95 sales: $268.8 million

FY 95 earnings: $26.1 million

Operations: 163 funeral homes, 107 cemeteries

Shares outstanding: 27.34 million

Exchange: Nasdaq

Friday close: $38.25

Loewen Group

+ Headquarters: Burnaby, B.C.

1994 sales: $417.5 million

1994 earnings: $38.5 million

Operations: 814 funeral homes, 179 cemeteries

Shares outstanding: 47.94 million

Exchange: Nasdaq

Friday close: $27.73

Copyright © 2019, The Baltimore Sun, a Baltimore Sun Media Group publication | Place an Ad
52°