Life After Corporate Death Care

It has been a bad few years for the corporate death care or "after-death" industry, and people aren't dying fast enough or expensively enough to fix the problem. As traditional religious death rituals have given way to more secular alternatives, a consumer revolt against the high cost of dying in America is well underway.

After more than a decade in which corporate death care providers aggressively sought to expand their market share, particularly in communities of color, run funeral homes and crematoriums like stealth franchises, and introduce concepts like "branding" into the death care mix, they're now clearly on the retreat. Several major providers have filed for bankruptcy, while others have faced serious legal troubles related to their business practices.

The dramatic contrast between the present and the recent past is evident in a March 1998 U.S. News and World Report article. The article reported that the price of funerals in the preceding five years had risen three times faster than the cost of living, that the "Big Three" death care businesses -- Service Corporation International (SCI), The Loewen Group and Stewart Enterprises -- owned 15 percent of the country's 23,000 funeral homes, handled one in every five funerals, and enjoyed average profit margins approaching 25 percent. The article reported that the average cost of a funeral in 1998 in the United States was $8,000.

Houston-based industry leader SCI saw its revenues drop from $3.3 billion in 1999 to $2.2 billion in 2002, and lost more than $1 billion during that time period. In 2000, SCI owned 3,382 funeral homes. As of April of this year, that number had dropped to 2,393. The San Antonio Business Journal reports that SCI "faces stiff competition from a growing number of independent funeral homes," most of which, the article continues, were once owned by SCI. "In the past few years, many of those independents were able to repurchase their autonomy... Now these independents are aggressively bleeding revenues from [SCI]."

Canada-based Loewen Group, which deliberately targeted black-owned funeral homes for acquisitions, bought up more than 340 properties between 1996 and 1998, and reported an operating profit of nearly 58% in 1997. After studying federal census and crime statistics, the Loewen Group apparently concluded that higher mortality rates -- coupled with a cultural preference for high-markup burials -- made funeral homes in black communities attractive properties. In addition to buying up large numbers of funeral homes in black and Latino communities, The Loewen Group went still further, making a deal with the National Baptist Convention USA -- the largest black organization of churches in the U.S. -- to appoint two Loewen-trained "funeral counselors" to every congregation. These "counselors" sold graves, tombstones, vaults and other Loewen Group services to congregants for a 10 percent commission.

Loewen declared bankruptcy in May of 1999, but has since restructured and now operates as The Alderwoods Group, albeit on a far smaller scale. The decline of the Loewen Group was precipitated in part by two judgments against the company -- one for $150 million and the other for $50 million -- for unfair pricing.

SCI and the Loewen Group represent two of the more dramatic examples of the corporate death care industry's decline, but across the board, corporations attempting to turn a profit on death have seen their incomes and market shares dwindle.

So what happened to an industry once considered recession- and inflation-proof?

What Went Right

The best answer is that the death care industry, long one of the most ethnically diverse and economically stable sectors of the economy, simply proved to be incompatible with corporate values and business practices.