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Final arrangements: Cemeteries must compete for customers

Third in a series

Tuesday, May 25, 1999

By Gary Rotstein, Post-Gazette Staff Writer

It's no easy task these days picking where to spend an eternity.

 
  Lil Kozel and her husband Bill, of Pleasant Hills, polish the bronze grave marker of Max and Frances Schinkovic at Jefferson Memorial Park in Pleasant Hills. Max Schinkovic was Lil's brother and Frances was his wife. (Andy Starnes, Post-Gazette)

Once upon a time in America, most people just ended up under a cross on the family farm or in a church yard in the town center. Now the 2.3 million people dying annually in the country, or their survivors, select among cemeteries varying widely in size, history, appearance, ownership, costs and rules.

One thing the burial grounds share is the desire to have your business, and many will pursue you while you're upright for the chance to place you horizontally later.

In death, as in life, there is something for everyone.

You can spend a few hundred dollars at venerable Allegheny Cemetery for a small cremation niche in the most out-of-the-way, high-off-the-ground part of its public mausoleum.

You can pay about $1,400 for a grave site and the digging charge -- known as the opening/closing fee -- at a traditional cemetery like Union Dale on the North Side, and purchase a burial vault and granite tombstone elsewhere.

You can write a check for $2,000 to $3,000 long before you die to Forest Lawn Gardens in McMurray or any of the other memorial parks in the region that specialize in pre-need arrangements -- soliciting you to buy your grave plot, vault and flat bronze marker years before you'll need them.

Or you can go the one-stop-shopping route at a "combination" such as Jefferson Memorial Cemetery & Funeral Home in Pleasant Hills, where payment in the range of $5,000 to $10,000 would generally take care of all your needs from embalming and casket choice to burial and marker, without you or your mourners ever needing to leave the premises.

 
  More from the series:

Weighing benefits of pre-need paying


Final Arrangements, Part I: A time of reckoning for the region's funeral trade

Final Arrangements, Part II: For Mrs. McNair, tradition guides the journey home

Ordering reprints Of "Final Arrangements"

   
 

More decisions abound: seek burial in a religious cemetery or one that's nonsectarian; find a spot amid traditional upright tombstones or a more modern setting of markers all flush to the ground; go 5 1/2 feet deep in the earth or choose an above-ground mausoleum crypt; purchase death-related items from a cemetery, a funeral director, a monument dealer, a specialty retailer or over the Internet; scatter the ashes left from cremation or pay to place them somewhere permanently.

For those families that haven't considered such decisions in advance, the disposition of a loved one can be a time of confusion upon confusion.

"When people come to a funeral home or cemetery, I think they're essentially ignorant of what's involved," said Ron Deiger, vice president of Union Dale, the non-profit operation from before the Civil War that focuses on burying the dead instead of selling merchandise to the living.

Unlike Union Dale, most large cemeteries want to maximize revenues, similar to any other business.

They sell vaults, monuments, family mausoleums, urns, sculptures, plaques and sometimes even caskets in order to raise funds to improve their facilities or the bottom line, and they compete fiercely to convince consumers they're the best ones to buy from. That goes for many non-profit operations as well as those privately owned.

"Our role has expanded -- we've probably had more change in the last 10 years than in the first 40," said Annabelle McGannon, executive director of the Catholic Cemeteries Association of the Pittsburgh Catholic Diocese.



Before the 20th Century, cemeteries weren't really business ventures. Church and civic leaders founded Allegheny, Homewood, Union Dale and other sprawling burial grounds as non-profit ventures laying people to rest away from the hustle-bustle of city life.

 
  Ron Poole, a worker at Jefferson Memorial Park, mows the "mall" at the cemetery, where all grave markers are flat with the ground to reduce maintenance time and costs. (Andy Starnes, Post-Gazette)

That began to change between the two world wars when memorial parks, developed by businessmen sensing a profit in the field, started sprouting about the countryside, emulating versions built in California. Most have a distinctive look. To reduce mowing time and maintenance costs five times or more, they keep gravestones flat on the ground instead of upright.

These newer cemeteries really took off after World War II, when people had more disposable income to plan their futures and returning G.I.s found cemetery sales positions in a tight job market. Their success resulted in changes that are still affecting the rest of the cemetery and funeral industries today, as resistance fades to the idea of waiting for someone to die before you make them a customer.

The name of the game for the memorial parks was sell, sell, sell -- the sooner the better.

Jefferson Memorial Park had 50 salesmen in the years after World War II, traveling door to door to make cold calls in neighborhoods far from the cemetery's South Hills base.

Jefferson had to be aggressive in order to capture the burial market ahead of longer-established cemeteries where prior generations of families were laid to rest, and also to get people to purchase burial vaults and grave markers from the cemetery instead of from funeral directors or monument dealers.

"Ninety-two percent of the people we're burying own their graves before dying. That goes to show you more than 40 years of work have paid off," said Harry Neel, president of Jefferson, which is one of the largest cemeteries in Pennsylvania with more than 325 acres.

The marketing success of Jefferson and other aggressive operations has pressured many other cemeteries to follow suit, or risk losing sales of burials and merchandise. Today, salespeople from Jefferson, non-profit Allegheny Cemetery and the Pittsburgh Catholic Diocese's Calvary Cemetery are virtually interchangeable in how they tout their products.

Cemetery operators describe pre-need sales as a sound way for people to avoid making emotional, confused decisions at the time of death. The cemeteries benefit from it, meanwhile, by locking up future business to the detriment of competitors.

"When you're against the wall to make a decision, you feel uncomfortable," Dave Regina, president of Forest Lawn Gardens, said of consumers. "If you have time to make an intelligent, reasoned decision, that's what you prefer."

He noted that the funeral industry, long resistant to pre-need selling but relenting in the 1990s, has hurt its image by expecting people to make pricey decisions at their most vulnerable moments.

An American Association of Retired Persons survey of people over 50 in 1995 found that 27.5 percent had paid in advance for funeral or burial expenses. That amounts to 16.9 million people, and they were far more likely to have pre-paid for cemetery plots than for funerals, partly because the cemeteries had more active sales organizations.

The burial industry, however, sometimes rankles people with strong sales tactics. Repeated mailings, phone calls and household visits soliciting business can turn families cold to the idea of pre-arranging their death details. Sales representatives working on commission depend for their survival on getting at least one of every three individuals hearing their sales pitch to sign a contract.

"I don't think there's anything inherently wrong with pre-need sales, but it comes down to how moral are the people running the operation," said Union Dale's Deiger, who doesn't solicit advance purchases. "A lot of business is being driven to us by people who are running from" other cemeteries.

Darryl Roberts, a former owner of cemeteries and funeral homes in West Virginia, wrote a book, "Profits of Death," confessing to tactics "I'm not real proud of" to try to spur sales. Customers would be offered a certain price for a burial plot or merchandise "only if they acted today," when anyone coming in the door the next day could get the same price.

Tom Hornstein, a cemetery consultant who built up Allegheny Cemetery's sales program years ago when general manager there, said that strong salesmanship is important in persuading a reluctant consumer to face up to decisions better made ahead of time.

"We don't misrepresent, we romanticize," Hornstein suggested, in order to close a deal.



No one is more interested in advance sales and maximizing profits than the national conglomerates that have become a growing force in the death care industry.

 
Stan Klodowski, a member of the interment crew at Allegheny Cemetery in Lawrenceville, readies a burial vault to be placed inside an open grave site. (Andy Starnes, Post-Gazette) 

The two largest chains, and the only ones with Western Pennsylvania properties, are Houston-based Service Corp. International and the Loewen Group, headquartered in British Columbia.

Each has spent the 1990s amassing hundreds of funeral homes and cemeteries. They are known for their large national sales operations, and for introducing practices such as selling caskets on a pre-need basis from their cemeteries instead of yielding that revenue automatically to funeral homes.

The national corporations don't change the names of local businesses when they buy them, preferring that consumers associate them with the longtime reputations of the previous owners. Thus, when Loewen sold off its 18 Pittsburgh area cemeteries last month as part of a $193 million transaction to reduce debt, it might have been a surprise to people with property in Mt. Lebanon Cemetery, Mount Royal Memorial Park and the others to realize their cemeteries were involved.

The sale leaves Loewen with no cemeteries and five funeral homes around Pittsburgh.

SCI owns two funeral home/cemetery combinations, three other funeral homes, a cemetery and a half-interest in a cemetery.

SCI, Loewen and other chains have been more acquisitive in other parts of the country, and have been criticized for raising prices above their competition when they move into an area.

The Pittsburgh market has not been as attractive to the conglomerates, with its abundance of smaller and less profitable funeral homes, and with a limited number of large, for-profit cemeteries available.

"When you look around Western Pennsylvania, the majority of independently owned cemeteries they would be interested in purchasing have already been sold," Neel said. He said the chains have quit calling him about purchasing Jefferson because he's already "told them no a hundred times."

The past year has seen a downturn in the finances of both SCI and Loewen, the latter more so. In Loewen's case, analysts say, losses from lawsuits and overpaying for its acquisitions have put the company deeply in debt, with bankruptcy a possibility.

SCI failed to generate earnings in 1998 that met expectations, and its stock also lost more than half its value. While it has rebounded better than Loewen and could have a prosperous future as the nation's number of deaths increases, analysts also see the financial problems stemming in part from consumers' increasing cost concerns.

"For years and years this industry was not considered particularly price sensitive," noted Lynn Detrick, a stock analyst for Sanders Morris Mundy in Houston. "I think part of that was due to this being an area without much consumer awareness. I think that has changed -- people are more sophisticated buyers of these services."



Two of SCI's local properties, the Sylvan Heights Cemetery/Haky Funeral Home in Uniontown and the Sylvania Hills Memorial Park/Gabauer Funeral Home in Rochester, are funeral home/cemetery combinations for a reason -- the same reason that Jefferson is envied by other death care providers in Allegheny County.

The all-in-one funeral-burial operation is seen by many analysts as the industry's inevitable direction. From the reduced overhead and transportation involved, it provides consumer convenience and potential savings for the cemetery, the customer or both. The combinations have been in vogue for decades in California and other states, and they are becoming more common here.

Regina said Forest Lawn Gardens will begin construction of a funeral home costing more than $1 million on its property this year, making it the fourth such combination in the area.

The Beinhauer funeral homes recently combined with three Washington County funeral home operations to purchase 160 acres of farmland along Route 19 in North Strabane that will become a burial ground known as Woodruff Memorial Park. It is designed to offer some of the economic benefits of combined funeral-cemetery purchasing though no funeral home is planned on the cemetery.

"If we blink our eyes and come back 20 years from now, [combinations are] what the trend's going to be," said Tom Roberts, Allegheny's general manager. "To serve the consumer better, Allegheny Cemetery will at some point have a funeral home in its future."

It's yet to be proven that this idea of keeping everything in one place will be as broad and successful in Pittsburgh as elsewhere, considering the public's longtime ties to neighborhood funeral homes.

Neel said the goal of most combinations is for half of the people being buried at the cemetery to also hold their funeral there, giving the overall operation the entire death benefits. That's not realistic in Western Pennsylvania, he said, considering the traditions and topography.

Nearly six years after opening one of the most ornate facilities in Allegheny County, the Jefferson funeral home is capturing only about 16 percent of its burials.



The Pittsburgh Catholic Diocese has sent shock waves through the rest of the death industry here with expansion of another sort.

The diocese, which operates 15 active cemeteries in Allegheny and Washington counties, has begun enrolling parishioners in its new Catholic Funeral Plan. Families purchase insurance that locks in the current price of funeral costs with a participating funeral home, and in doing so they're reminded of the church's emphasis on a final Mass and other Catholic rituals.

That plan has provoked an outcry from a number of the area's funeral directors, many of them Catholic, who allege the church is engaging in improper competition with them. The funeral plan has broadened a controversy surrounding the increased sale of monuments and other merchandise throughout the 1990s by the diocese's Catholic Cemeteries Association.

McGannon, the CCA executive director, said the church has become more aggressive in trying to handle details of Catholics' deaths in response to competition from other cemeteries and concerns about erosion of Catholic rituals and traditions associated with funerals.

About 86 percent of the Catholics dying in the Pittsburgh area wind up in a diocese or parish cemetery, McGannon said. That's a far higher percentage than most places, but she said church leaders are concerned about another trend -- a decline in the number of families holding funeral Masses before burial.

With more mixed marriages and younger generations lacking the same commitment to the church as their parents, the church wants to become more involved in people's funeral and burial plans to remind them of the importance of Catholic rituals, McGannon said.

The growth of funeral home/cemetery combinations means people have an economic incentive to avoid conducting a church service and incurring a transportation charge, she noted. Those signing up for the Catholic Funeral Plan will have the importance of the Mass, a vigil service and other rituals pressed upon them.

"Our purpose is not so much to correct an existing situation, but to read the writing on the wall," McGannon said, responding to funeral directors' assertions that such a plan is unnecessary. She said the plan is less extreme than building funeral homes on Catholic cemeteries, a step undertaken by the Catholic dioceses in Denver and Los Angeles.

Both funeral directors and monument dealers believe the Pittsburgh diocese is intruding upon the job they've done for generations, and they contend the diocese is motivated more by money than religious principles.

About 350 funeral homes in the six-county diocese were sent information encouraging their involvement in the funeral plan, and 38 had signed up by the end of April. If a funeral home does not participate, there's a chance it will lose longtime Catholic customers to a competitor who joins the network.

Among those who haven't signed up, leaders of the Allegheny County Funeral Directors Association complain that they weren't consulted about the program in advance, they don't trust the diocese's sales representatives to represent funeral homes properly with consumers, and they're not convinced the plan provides necessary benefits to participating funeral homes.

They also question the legality of the plan, based on state law permitting only funeral directors to sell funeral services. They accuse the church of sabotaging a longtime bond between funeral directors and priests in maintaining tradition.

"I don't like being in competition with my church," said James D. Hahn, a Millvale funeral director who is president of the Pennsylvania Funeral Directors Association. "We can all compete against free enterprise -- you can't compete against God though."

He said the association intends to challenge the legality of the Catholic Funeral Plan with the State Board of Funeral Directors or state courts, once a test case can be established through a consumer who is sold the plan.

The Catholic Cemeteries Association is already a defendant in a suit filed in April by the Monument Dealers of Pennsylvania, which contends the diocese has violated anti-trust laws in restricting the local dealers' ability to serve customers in Catholic cemeteries. And the Pittsburgh school district is challenging the tax-exempt status of the group, based on the amount of revenue it is generating from monument sales at the cemeteries.

McGannon said the cemeteries association has its own review under way to determine if it should voluntarily turn its monument operation over to its for-profit, taxable subsidiary, the Catholic Family Security Association, which is already handling the pre-paid funeral insurance plan.

She suggested the funeral directors and monument dealers condemning the Catholic church's death-related work are just overdue in coming to the same realization the diocese did a few years back -- be prepared to change or lose out to bigger, more aggressive competitors.

"There's a hurricane coming," McGannon said. "Americans are changing the way they purchase everything, and the funeral and cemetery industry is just catching up."



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