Funerals Are Big Business

WASHINGTON JEWISH WEEK
February 1-9, 1998
by Merry Eisenstadt and Marcia Kay
Contributing Writer and Managing Editor

Local 'Jewish' homes no longer Jewish-owned

The Washington area's three "Jewish" funeral homes and a major non-Jewish provider of Jewish funeral services have been acquired by the world's two leading funeral conglomerates, effectively cutting competition in half, from four "independents" to two corporate-owned firms.

The buyouts mirror a nationwide trend toward corporate takeovers and consolidation l in the "death care" services industry, as fewer children of mom-and-pop independents choose to follow in their parents' footsteps.

Funeral industry critics charge that the corporate takeovers frequently are misleading because the names of the acquired homes and cemeteries are retained, giving a false impression of competition and local ownership.

In the local Jewish market, former independents have retained their Jewish-sounding names. And the non-Jewish firm that contracts with the Jewish Funeral Practices Committee to provide basic, reduced-cost Jewish funerals--Ives Pearson Funeral Home of Northern Virginia—has kept its name, although it was acquired by the Loewen Group two years ago.

But even if the local outlets were all called SCI or Loewen, and even if the public deemed the chains tacky, would it even matter given the ultimate need for death services and the limited Jewish options?

On Rockville Pike, Ed Sagel Funeral Direction is located across the street from Danzansky-Goldberg Memorial Chapels. Two competing Jewish companies, right? Wrong.

Both are now owned by Houston-based Service Corporation International (SCI): —the world's "largest funeral service enterprise" with 3,012 funeral homes, 365 cemeteries, and 156 crematoriums worldwide, according to SCI's literature. (SCI also owns King David Memorial Gardens in Falls Church.)

Ed Sagel was acquired two years ago, according to Sagel, 32, who was retained as manager and a funeral director. Danzansky-Goldberg was bought out in 1991.

The other two providers of Jewish funerals, Ives Pearson and Stein Hebrew Memorial Funeral Home Inc., in the District, have been acquired by Vancouver, Canada-based Loewen, the "second largest and fastest growing publicly held funeral service corporation in North America" according to its Internet web site. Loewen operates more than 1,000 funeral homes, 450 cemeteries and 50 crematoriums in the U.S. and Canada.

The lawyer for the Jewish Funeral Directors Association does not criticize the buyouts. Notes Stanley Robinson, "Our experience is whenever Loewen or SCI comes in, it has not affected the Jewish standards. We have had no more problems with the corporations than the individual [firms]—maybe even less." The association includes corporations and independents as members.

Funeral industry whistle blower Darryl J. Roberts criticizes the climate surrounding funeral services takeovers: "When you've got a Walmart or a K-Mart or a CompUSA coming into a community, they thrive because they offer more service to the consumer at one location at a cheaper price. But when the funeral industry [takeover occurs], they don't tell anyone they've bought it and then they raise prices," he told WJW. "People do not realize" the former independent "is a big company. And they don't know what these things [funeral services] should cost," charges Roberts, author of Profits of Death: An Insider Exposes the Death Care Industries (Five Star Publications, 1998).

Industry critics charge that corporations raise prices to pay for acquisitions and to show stockholders higher profit margins.

Similarly, Harvard University 'economics professor and author N. Gregory Mankiw charges, "The larger companies are able to decrease costs by buying caskets and other necessities at volume discount. They often link neighboring homes in order to share hearses... However, these lower costs are not being passed on to the families of their customers." (Principles of Economics, Dryden Press, 1998)

But local providers of Jewish funeral services argue that they are not misleading the community about their firms' ownership, and that their operations have continued as usual. They also say that funeral homes make price lists available in accordance with Federal Trade Commission regulations, and that prices have not risen by extraordinary amounts since the takeovers.

Sagel says his reasons for selling his then-two-year-old business to SCI are "personal." He notes that contrary to SCI's national reputation, he feels the corporation retains local staff. I'm still here doing the same thing I was doing before. That's the most important thing to me," he says.

Sagel says his prices have increased by a few hundred dollars, an increase that would have occurred without the takeover.

Retaining the firm's Jewish name and gold Star of David symbol is "not misleading because I'm here and my name is in the public. In today's world, when you go into places, do you know who owns it?" Sagel continues.

Danzansky's manager, Reform Rabbi Robert Jacobs, agrees: "When you go into an automobile dealership or a department store, do you stop and ask if it is still owned by the family who founded it?" He adds, "It's not a secret in the community that this change [in ownership] has occurred."

"The competition is cut in half but competition still does exist," says Ives Pearson funeral director Peter Hause. "There are a lot of prices out there and people can shop [around] and get what they want," he adds. Although heavy emotions and Jewish requirements for burial, preferably within 24 hours, seem to limit comparison shopping (except for pre-arranged cases), Hause says "today we get a lot of calls: 'How much is your price on this'…. People know what they want. They are shopping."

Ives Pearson provides no-frills funeral services according to strict Jewish legal standards. Using Ives Pearson's facilities, Jewish volunteers from these Chevra Kadisha provide the ritual washing, dressing in shrouds, "casketing of the body" and guarding (shomrim). The contract calls for a $370 charge for professional staff and services and $415 for the " Orthodox pine" coffin. Taxes, death certificates, obituaries and limousines/hearses are not included. Ives Pearson sends one funeral director to the funeral.

Similar arrangements at Ed Sagel run slightly higher; an average funeral costs $975. Sagel acknowledges that his costs can run as steep as the high-end providers, depending on families' selections, including casket choice.

Indeed walking into Sagel's casket showroom, the gleaming, stained-wood caskets with cushier interiors in the $5,000 price range are positioned closer to the entrance. Simple, unfinished pine coffins are visible from the entrance, but are tucked around the back corner.

At Danzansky-Goldberg, an average funeral costs around $5,000, according to Jacobs. Nationwide the average funeral runs between $4,500 to $5,000.

The Jewish Funeral Practices Committee of Greater Washington, which represents more than 20 synagogues and Jewish groups in the Washington area, arranged the contract with Ives Pearson. That contract is up for renewal in June, but executive directors of several large synagogues in the area are optimistic that it will be renewed. Jewish funerals comprise about one-third of Ives Pearson's business, according to funeral director Hause.

Joe Miller, executive director of Ohr Kodesh Congregation in Chevy Chase, says his congregants are "pleased" with the service they receive from Ives Pearson. The relatively small fee the funeral home charges includes much of the above-mentioned services. It also includes taking the body to the airport if the burial is out of town.

Glenn Easton, executive director of Adas Israel Congregation in the District, fears if the contract is not renewed the Funeral Practices Committee will have to find another place "or maybe go out of business. Then, people will be at the mercy of the commercial businesses."

The largest determinant of funeral cost is casket price, local funeral directors agree. Therefore, families can control total cost by a big margin," Jacobs says. At Danzansky, caskets range from $695 for the plain wood variety with straw inside to $16,000 for highly polished, stained-wood coffins with cushion interiors.

Is it ethical for Jewish funeral homes to market elaborate caskets which are not necessary—and even frowned upon—under Jewish law? Jacobs says that for many families, the notion of seeing their loved one in an unadorned, unfinished casket is unacceptable." He adds, "When you go to buy a wedding dress, they don't tell you [that] you could just buy a simple muslin dress" and that an elaborate gown is unnecessary.

Sagel funeral director Dan Simmons criticizes before-and-after acquisition price comparisons, such as those broadcast Feb. l on CBS' 60 Minutes, as "unfair" because those comparisons don't account for the quality of the independents before takeovers and other factors. "They don't take into consideration that the large guy has the higher overhead. They profile SCI as a corporation and don't look at the individuals of that corporation, the funeral directors who take their work very seriously…. Quality people, superior staff is a very big issue with SCI."

Simmons insists that Sagel and Danzansky operate like two different businesses, since they each appeal to different customer preferences. Sagel, founded in 1994 as a discount funeral home, is known for offering basic, fewer-frills arrangements, while Danzansky-Goldberg typically provides more staff members at the funeral and more elaborate amenities.

Takeovers of Jewish owned funeral businesses by non-Jewish corporations raise the question of just what is a Jewish funeral home. In today's climate of varying levels of Jewish religious observance, a Jewish funeral provider is one that primarily serves Jewish people" and not necessarily a firm that only conducts arrangements according to Jewish law.

All of the area's providers of Jewish" funeral services offer options -- at the family's request -- like embalming and cremation that violate Jewish law.

We have to cater to the entire community," notes Simmons. If a "Jewish" funeral provider refused cremation or embalming, then that Jewish family would be forced to go to a Christian funeral home," he adds: "We don't do many at all; we don't market it," he says of cremation. Similarly, Danzansky's Jacobs questions, Does being Orthodox imply being correct?" If a family requests, Danzansky's will allow public viewing of the body and cosmetic make-up," he says. Embalming is "done rarely" and is only required when the general public views the body. (Jewish law only allows embalming under rare instances for sanitary reasons.)

In the end; Jacobs emphasizes, ... the decisions are a private matter for the family" to decide.

Extra charges for halachic observance

By Marcia H. Kay
Managing Editor

Although the cost of having a Jewish funeral has been kept relatively low due to the contract between Ives Pearson Funeral Home and the Jewish Funeral Practices Committee of Greater Washington, additional costs are quietly being added to the price of a Jewish funeral by one local cemetery.

Jewish law urges that body be buried within 24 hours of death unless that..' death occurs on Friday or on".. a Jewish holiday. Extenuating circumstances, which may include waiting for a family member who must travel a long distance, may also delay funeral.

Mt. Lebanon, a cemetery in Prince George's County owned by SCI, recently instituted a policy of charging an extra $400 if a family calls after office hours—which are 9 a.m. to 5 p.m. — and requests a funeral the next day. If that next day happens to be Sunday, there is an additional charge of $400.

Ed Sagel, manager of Ed Sagel Funeral Direction in Rockville, also is the general manager of Mt. Lebanon Cemetery. "If somebody calls before 5 p.m. and asks for a burial the next day, there is no surcharge and we can adjust the schedule accordingly."

However, Sagel says, if a family member calls and requests a funeral that day, there is a surcharge. "We have to adjust the total schedule of the workers. "There is overtime involved."

Sagel says the $400 fee is charged because the unexpected funeral "disrupts the total work schedule. A person that's off may have to come in."

Sagel did say that some of his staff have pagers and can be reached after hours by families. He says families that reach personnel by pager then have the opportunity to contact family members to tell them that the funeral will be the next day.

The Cemetery Committee off the Washington Board of Rabbis is scheduled to meet with Sagel and representatives of SCI next week to discuss the surcharges. "The market is being held prisoner to their business practices," says Rabbi Jack Moline, president of the Board of Rabbis.