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

February 05, 1996|By Joe Mathews | Joe Mathews,SUN STAFF

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.

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