Dying for Dollars

As the death-care industry booms and consolidates, Houston's Service Corporation International is leading the way

The salesman then continued to expound on the virtues of a mausoleum over a regular grave. In addition to the $1,200 for the grave, it costs $575 to dig the hole (industry professionals prefer to call it "opening and closing" the grave). Add another $1,100 for a vault and $1,000 for a marker, and a regular plot will run $3,875. Thus, he explained, buying a space in the yet-to-be-built mausoleum was a better deal.

It's easy to see why SCI wants consumers to be shelved in a mausoleum. The company makes more money. Why sell a three-foot-by-nine-foot plot that can handle only one person, when you can build a high-rise mausoleum and stack customers four or six high? Plus, you can charge customers more for what the saleswoman called "premium burial."

George Kriegshauser, who manages SCI's Houston-area operations, explained that about 1,000 graves can be put on a single acre of cemetery space. Selling spaces for a minimum of $1,000 each, cemetery companies easily make more than $1 million per acre of cemetery space. If they build mausoleums, they can sell up to 10,000 spaces per acre. Thus, per-acre profits increase not by a factor of ten, but by a factor of 20, 30 or 40, since a premium burial commands a premium price. During a visit to SCI's Memorial Oaks Cemetery on the Katy Freeway near Dairy Ashford, Kreigshauser explained that the company has about 50 acres of undeveloped cemetery land containing enough grave space for the next 75 years.

At Memorial Oaks, the company is prepared for the next millennium. SCI just completed construction on a snazzy $2 million funeral parlor, where everything is solidly upper-middle-class. Located a scant 20 paces from the white lines of the Katy Freeway, the building is an ornate palace for the dead. Very much a funeral parlor rather than a funeral home, filled with expensive chairs, carpet and decor, the new facility is almost identical to the new George H. Lewis facility at Champions, 20 miles to the north.

The Memorial Oaks facility represents the latest trend in the industry. One-stop shopping has come to death care. Companies like SCI save money by putting funeral homes right at the cemetery. Combination facilities reduce overhead and transportation costs, and they save time for company employees. The new combination funeral homes "are very popular with consumers," said SCI communications boss William Barrett. SCI, Loewen and Stewart have all begun stepping up their plans for combination facilities. SCI now has more than 60 combination facilities.

Independent funeral-home owners are mixed in their assessments of SCI. In Cincinnati, Bernie Naegele and a couple dozen other funeral-home owners banded together in the late 1980s to form a cooperative venture known as Care Givers -- with the express purpose of keeping the big firms out of their city. "I think I can better serve families than they can," Naegele said.

In Wisconsin, funeral-home owners united to pass a bill in the state Senate prohibiting funeral homes from owning cemeteries, a move which effectively limited the ability of the big firms to move in.

Here in Houston, Christina Morales, owner of the Morales Funeral Home, said of SCI: "They are good in that they make it as professional as possible. But they also raise the cost of funeral prices because they have such a monopoly on the funeral-home business." Morales said her business focuses on the Hispanic community, where SCI hasn't shown much interest. "Their franchising hasn't resulted in any breaks for the consumer," she said. "They have these head honchos and they have to pay their salaries, too."

Reggie James, project director for Consumers Union in Austin, had little good to say about SCI and the death-care industry. "The funeral industry is ripping off the consumer," he said. Wary of the corporate move into the industry, he said: "I think it needs to be regulated like a utility. They are a monopoly. Market pressures don't apply, so you can't control the price. People can't use demand to adjust the price, and consumers can't shop to get a better price because of the time limitation."

James's favorite target is the pre-need aspect, which SCI and other funeral companies are promoting very heavily. Referring to the businesses' dubious practice of withdrawing the accumulating interest from pre-need trust accounts (a practice recently outlawed in Texas), James commented: "We have had horrible problems with long-term care policies. We have always said [the pre-need contract] is not a good deal. In the alternative, we said customers should put money away." James said that other investment options, including life insurance, provide better value to the customer.

The merits and the drawbacks of the corporatization of the funeral business could be argued for days. SCI and the other big companies have brought computers and efficiency to a business formerly dominated by cabinetmakers, who built coffins in their spare time. Just like other businesses, they have a right to expect a decent return on their investment. But how much of a return should they get? Is 30 percent enough? Is 80 percent too much?

Chris Layton teaches the history of American funeral services at the Commonwealth Institute of Funeral Service. He believes that the role of SCI and other large funeral companies will increase because of what he calls "neo-localism." He said that the transitory nature of the American population will lead to an increased reliance on funeral homes to care for the dead. And he sees little opportunity for change. "At funerals, people become very traditional," he said. "Funerals are like weddings. People are concerned with the social aspects. It's the social value in what they are doing that is most important."

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