Welcome to B.C.’s funeral wars, where the fight to bury the stiff competition never dies.
Picture the scene: a recent widow, her face lined with grief, comes to a funeral home to discuss how she will lay her beloved to rest. After an intimate discussion with the sympathetic funeral director, she is assured that her husband’s wishes for a modest funeral will be honoured. Then the director gently suggests she speak to the in-house grief counsellor. An hour later the low-key $5,000 funeral has morphed into a $15,000 affair. The widow won’t know what hit her until after the dust settles. Neither will she know what to do when the same grief counsellor visits her again, 10 days after her husband’s burial, to -encourage her to sign a deal for future funeral arrangements of other family members. Too upset and fragile to argue, she may well comply with his -suggestions. Welcome to B.C.’s funeral wars, where the fight to bury the competition never dies. It’s no -wonder that next to the much prophesied avian flu -pandemic, the most anticipated event for B.C. -funeral operators this year is the awarding of the lucrative Memorial Society of B.C. (MSBC) -contract. It’s the chance to bury 15 per cent of the province’s dead – some 5,000 funerals annually – a deal worth up to $50 million. The province’s not-for-profit Memorial Society, originally formed by the Unitarian Church in 1956 “to promote dignity and simplicity in funeral rites,” began with 55 members. Today, it has 207,000 and is the largest society of its kind in North America. (Of course, thousands terminate their memberships each year “for reasons of death.”) For $20, members get “preferred pricing” on funerals, and the peace of mind that comes with knowing their grieving next of kin won’t have to deal with the hassles and haggling of planning their final send-off. When the time comes, MSBC members simply book ¬funerals through the company contracted by the society – and come September, that contract is up for grabs. In an industry where sales are literally one-off, it’s no wonder that 60 funeral chains and individual funeral homes – virtually all of B.C.’s death-care industry players – are vying to become MSBC’s ¬official provider of funeral goods and undertaking services. Given its sizeable aging membership, you’d think the MSBC would have enormous clout and could impose its will on the funeral industry to guarantee its members the best price – but you’d be dead wrong. There’s no love lost between the society and local funeral providers. The key players that pull the strings in B.C.’s fiercely competitive funeral business have a long and choppy history, and that history’s baggage could determine who wins the big prize of deciding how thousands of British Columbians will be laid to rest for years to come. When MSBC was founded in 1956, local Vancouver funeral homes acted like a price-fixing cartel and collectively chose not to service the new society. An alliance with Frank Kearney, founder of Kearney Funeral Services, was brief, and subsequently Doug Foreman, an MSBC member and Pattullo Bridge toll-booth operator, began offering funeral services to fellow members in 1961 – complete with plywood caskets built in his North Vancouver garage. (According to Phillip Hewett, former Unitarian minister and author of The Memorial Society of B.C.: A Glance at its Early History, the local funeral industry threatened to boycott manufacturers who supplied Foreman with coffins.) Foreman’s enterprise would become First Memorial Funeral Services, now a 17-home funeral chain throughout B.C. The chain signed its first contract with MSBC in 1966 and agreed to the society’s “preferred pricing” for members; in return the society made First Memorial its exclusive undertaker. From the start, the relationship was bumpy: there was a lot of bickering about money. Foreman’s group even lost the contract in the ’70s, gaining it back within a year. When Foreman died in the early ’80s, his family continued to operate First Memorial, but by 1987 the chain had fallen into disrepair. That’s when Lawrence Little, now owner and president of Personal Alternative Funeral Services, a Lower Mainland funeral company, was hired as manager. Little quickly fixed things up. “The buildings were run down. People weren’t trained. It was just unbelievable,” he recalls. “So we modernized it, put some money into the buildings, invested in our people, dressed them properly, trained them and brought them into the 20th century.” The reason for all this, says Little, wasn’t to please the society: “We cleaned it up to sell it.” On April 23, 1989 after days of difficult negotiation with the society and the Foreman family, First Memorial was acquired by a Houston, Texas, company called Service Corp. International (SCI). The deal was signed at 3 a.m. at Vancouver’s Bayshore Inn. SCI not only bought all 17 First Memorial funeral homes in B.C., but also negotiated the right to remain the MSBC’s exclusive undertaker. In essence, it acquired the waiting list of 200,000 people depending on the society for a simple, inexpensive funeral. It seemed an odd fit. SCI described itself at the time as “the world’s largest death-care provider” – not exactly the kind of company that one would expect to keep funeral costs to the bare minimum. SCI still claims to be the largest provider of funeral services in North America – it pretty much invented the funeral chain concept – and just last month it gobbled up another corporate competitor, Alderwoods Group, to make competition even tighter. SCI now owns 41 funeral homes and five cemeteries in B.C. SCI is not only rich – it’s also famous. Jessica Mitford wrote about it in her 1963 bestseller The American Way of Death, the original indictment of funeral industry avarice in America. Among its current holdings, SCI owns the prestigious companies that arranged the funerals of John F. Kennedy, Winston Churchill, John Lennon and Howard Hughes. It has operations in 20 countries on five continents, including some 3,500 funeral homes, nearly 450 cemeteries and almost 200 crematoria. SCI ’s revenues in 2005 exceeded US$1.7 billion, and it boasts it has the capacity to provide funeral ¬services for 80 per cent of all U.S. households. In B.C., SCI often operates under the Dignity banner. Following its US$856-million purchase of Alderwoods, SCI now controls an estimated 60 per cent of B.C.’s funeral home business. Along with Arbor Memorial Services, the other big player here, corporate control is up to 80 per cent of all funeral homes in the province, many of which were acquired in the big buying binge of the ’70s and ’80s, when SCI and the Loewen Group were fiercely acquisitive and competitive. It was a time when both companies acquired any North American family-owned funeral home willing to sell – then kept the family name on the door and, often, mom and pop to run it. Like any large corporation with an appetite for mass expansion, SCI has been hit with its fair share of criticism – not surprisingly, given that it operates in an industry as sensitive as “death care.” In recent years, SCI-owned companies in Florida were accused of “digging up bodies and dumping them in the woods to make room for new burials” (Reuters News Agency, 2002). Similar allegations were made about SCI-owned companies in Washington (salon.com, 2005). In the 1990s, U.S. president George W. Bush – then governor of Texas – was accused of influencing a regulating agency on SCI’s behalf (SCI is a large campaign donor), a charge Bush dismissed as “politics.” Consumer advocates still tend to hyperventilate when talking about SCI. Karen Leonard, the head of the Redwood Funeral Society in California, worked as a research assistant on Mitford’s latest book, The American Way of Death Revisited. She says SCI has “made price gouging state of the art.” As Leonard puts it: “They’ve been able to take the emotions that make people spend more – guilt and fear of death – and play them like an orchestra… They are taking advantage of consumers on all fronts – by secrecy, by their ability to control regulations and by their ability to give money to politicians.” Another criticism is that all those mom-and-pop shops bought out by SCI are now SCI employees serving SCI shareholders and the New York Stock Exchange – but not their customers. (SCI declined to comment.) It works this way, according to a former SCI /First Memorial employee who witnessed the transition and prefers anonymity: “The reason First Memorial worked so well [before SCI acquired the chain] was because First Memorial’s philosophy dovetailed with the philosophy of the society. So when we did our pricing for caskets, we kept that philosophy in mind. Same for the memorial books, service folders and all the ancillary merchandise and services – visitations, sanitary preparations, embalming – none of which are covered under the previous or current agreement. So when we would price those out, we would keep in mind the core philosophy of both parties: affordability, sensibility and simplicity. But now, in corporate hands, the pressure to up-sell starts.” The employee adds that members who joined the society up to 40 years ago won’t know that First Memorial is now owned by SCI. In signing with MSBC to get an inexpensive funeral, “They think they’ve done the right thing. And when they originally signed with the society, they were doing the right thing.” The employee says after clients have talked to the funeral director, “a grief counsellor” comes in to try to sell them an urn. “These guys are hard-core, high-pressure salespeople and they’re there to sell you merchandise: a casket you don’t need, an urn you don’t need or want, whatever.” [pagebreak] Then, there is the “after care.” This is when the “grief counsellor” visits the family 10 days after the service to “see how they’re doing” and eventually tries to seal a deal for future funeral arrangements of other family members. “On the second visit, we’re going to bring up, ‘Now, wasn’t it awful what they’ve gone through, not having all the arrangements for their husband in place. Why don’t we sit down and [organize that] and the kids won’t have to go through what they went through.’ Now they know me, and like me, and trust me and everything, and they’re writing a cheque for five grand. And that’s horrible. These people are not grief counsellors. It’s just smoke and mirrors.” Lamar Hankins, president of the Funeral & Memorial Societies of America, also claims SCI routinely engages in “price gouging.” Even MSBC’s new executive director, Walter Johanson, questions SCI-owned First Memorial’s fee structure. The former Lutheran priest admits that the smart shopper today would join the MSBC to get a good deal on the service – paperwork, transfer of remains and cremation – and shop elsewhere for the merchandise, including caskets and urns. That’s not much of an endorsement for his society’s own funeral provider. But Johanson’s admission reveals the core problem in the marriage between the society and SCI-owned First Memorial: Those vows they signed don’t cover everything that goes on in their relationship – and the omissions leave room for a third party to slip in. “Right now we have this black hole in our contract,” says Johanson. SCI has very low rates for the service fee, he says, but the contract doesn’t cover such necessities as caskets. Martin Toren, retired Langara college lecturer and past president of MSBC, agrees. “To a certain extent, the low price for a basic funeral has become a loss leader,” he says. “[First Memorial] charges unregulated prices for urns and other things like that.” The “other things” Johanson and Toren so casually mention are, in the innovative funeral industry, an extensive and creative list of items: caskets, casket pillows and pin lights, cemetery plots, grave liners, grave openings and closings, urns and urn niches, ash gardens, chapel rental, grave-side service, viewings and visitation, sanitary preparations, embalming, flowers, organist fees, limousines, programs, memorial books, celebration-of-life displays, newspaper obituaries. And the list goes on. “That’s where we’re finding huge discrepancies and problems,” says Johanson. It has to be said, of course, that SCI is not the only high-pressure funeral company in the world and that creative selling techniques are not uncommon in direct sales, regardless of the enterprise – from real estate to personal insurance. It’s not by accident that the Business Practice and Consumer Protection Authority, B.C.’s provincial agency that oversees funeral marketing, is the same one that monitors used-car sales. But generally speaking, only the large international funeral chains use commissioned salespeople. Local operators and small, locally owned chains normally do not. Their argument is that when there’s no commission involved, a salaried undertaker is more likely to consider the customer’s needs. So, if it’s true that salaried undertakers are more likely to put the needs of the customer first, why doesn’t MSBC simply hire the province’s local independents to handle its $35- to $50-million contract? For starters, no single independent funeral home has the capacity to deal with all of the MSBC membership’s death-care needs. Second, they’re not called independents for nothing. Lawrence Little, president of B.C.’s Personal Alternative Funeral Services, puts it plainly: “If you put the independents in one room, you wouldn’t get a consensus on what day of the week it is.” We’re talking feisty, fractious funeral directors, embattled in complicated legal manoeuvres with each other, harbouring decades-old grudges and demonizing each other daily. One larger-than-life figure in the independent sector is 50-year-old Tom Crean, who runs the oldest independent funeral home in Vancouver, Kearney Funeral Home, from a quaint two-storey house on West Broadway. In his more than 25 years in the business, Crean has crusaded to ban commission salespeople from the industry, eliminate GST on funeral prices and save public cemeteries. He has waded into the courts to break up the former Burnaby-based Loewen Group chain – even before it filed for bankruptcy protection in 1999 and rose from the ashes as Alderwoods. He is also the founder and international chair of the Family Funeralhome Association, established in 1989 “to advocate on behalf of bereaved consumers.” As the association’s mission statement puts it: “Our work has meant bringing some of the big companies and their lobbyists out into the light.” In his relentless campaigning against the “corporates,” Crean has testified at consumer affairs hearings in New York City, fought for tighter control on SCI trust funds in Florida and filed actions against Alderwoods in Canada and the U.S. In 1991, he even bought Loewen’s old New Westminster headquarters in a business coup. Aggressive, talkative and physically large, once Crean gets on a rant, trying to redirect the conversation is like trying to turn an oil tanker. But he seems to run a happy ship. Certainly his business practices model a mandate of fair dealing that is admirable – evident in a 2002 CBC TV Marketplace exposé of up-selling in the B.C. funeral industry. In it, Crean’s staff were the only ones “caught” on hidden camera recommending a lower-priced casket to a family clearly in financial and emotional need. Of course, Crean’s motives are not always entirely altruistic. Locally, he led the mid-1990s campaign to prevent Vancouver’s remaining public cemetery, Fraser Street’s Mountain View, from entering corporate ownership. A plot in a public cemetery is generally less than half the price of one in a private cemetery, which is the reason Crean won such widespread public support for his crusade. But he also had an ulterior motive: to ensure he would have a place to bury his Vancouver customers. It was entirely possible the corporate competition would have otherwise shut him out. Similarly, it was Crean’s lobbying initiatives that forced a change in B.C. consumer protection law, which now requires funeral homes to list a local address and phone number in their advertising. On the surface, Crean’s move looked like consumer advocacy, but it was, in fact, directed at his competition – the “alternatives,” which don’t have local addresses. Each has a headquarters in the boonies and advertises the same telephone number for every community served. A strict interpretation of the law could close the alternatives down, or at least impair the effectiveness of their marketing. In reality, this has not been the case. For the most part, alternative providers have simply ignored the new requirement, though Crean’s interference has not endeared him to Little, who calls the legislative change “a stupid, childish regulation motivated by greed.” Whatever else, one thing Crean and Little won’t be burying soon is the hatchet. Little, on the other hand, is an “alternative” provider who, in fact, may have originated the concept in 1992 after a long career in the funeral industry. His persona is that of the permanently aggrieved underdog; he speaks gruffly and his language is colourful. But Little clearly loves the business he was first attracted to as a seven-year-old, when he watched a funeral procession pass by his school and imagined he was driving the Cadillac. In 1970, Little started as an apprentice with a Richmond funeral home and worked his way up to own his own casket company. He sold entrepreneur Ron Young on the “alternative” concept and the pair opened, he claims, the first company of its kind in North America. “No monster funeral homes, no casket inventory” – none of the trappings of a traditional funeral parlour. [pagebreak] Today, Personal Alternative Funeral Services is the second-largest provider – as measured by number of funerals arranged – in the Lower Mainland (First Memorial is number one). That’s not obvious on the basis of the size and decor of Personal Alternative’s headquarters in Aldergrove. There is a chapel on-site, but it is a bare and desolate room, unburdened with anything that might be mistaken for ornamentation. Perhaps appropriately, the first object visible upon entering the adjoining waiting room is a calculator on a desk – this choice of provider is about economy, not ceremony. The company will arrange a service if the family wants one, though most likely not in their chapel. A neighbourhood church or hall close to the family is usually preferred. The company’s specialty is cremations, about half of which are arranged without a memorial or funeral service of any kind. With a phone call, Personal Alternative simply transfers the deceased to its morgue (where it operates its own crematorium) and dispatches an undertaker with the necessary paperwork to the family’s home. A few days later, the undertaker returns with the boxed ashes. All told, a $1,000 service. (See “Dying for a deal”,below.) “We live in a very disposable, transient society, particularly here in B.C.,” says Little. “We’re living longer; therefore there aren’t friends around to have a service. People are also living longer in palliative care and hospices, and when death finally comes, the few relatives left think, ‘My God, it’s a blessing. We’ve said our goodbyes six months ago. We don’t need the ritual of a funeral.’ ” Little has clearly identified a trend. About 75 per cent of funerals in B.C. now involve cremation, and half of those are conducted without memorial services. According to the Cremation Association of North America, the number of Americans choosing cremation will rise to 40 per cent by 2010. It’s a trend Little says reflects MSBC and Personal Alternative’s shared philosophy: “What we’re doing is a little more sophisticated, but not ¬unlike what Doug Foreman did when he said yes to the Memorial Society in July ’61. We simply gave control back to the consumer.” Giving back control to its members is exactly what MSBC intends – unlike in 1996, when the board simply waved through its contract with SCI. Martin Toren, for one, is still dismayed that the society renewed the contract without regulating the prices on merchandise (urns, caskets, etc) and auxiliary services (viewings, limousine rentals, etc). As a former MSBC director who came back to chair the society board after the 1996 contract was renewed, Toren told CBC TV’s Marketplace in 2002: “We’ll have to either see some improvement with what’s happening with the present provider, or we’ll have to get somebody else.” (Following the exposé, the MSBC board under Toren’s direction instituted a program in which members volunteer to accompany grieving families and executors to First Memorial funeral homes to help negate SCI-driven sales techniques.) But for the new September 2006 contract, the board, led by Gil Evans, is determined to use its leverage to regulate the full schedule of prices charged to members. For starters, last year the society brought in Walter Johanson as its new executive director. A priest with 13 years’ experience in hospice counselling and a degree in business administration, Johanson invited all of the players in the funeral industry to bid for the society’s business, including the society’s current service provider, SCI-owned First Memorial. So now the society must decide which provider to marry. Independent, alternative, corporate or some combination of the three? – if Johanson can get them all in the same room. He knows that finding agreement or common ground between this industry’s factions is a little like trying to write a new constitution for Iraq. There is also the sheer number of players involved. Since the bidding war began, 60 funeral companies, including SCI-owned First Memorial, have filled out the 14-page application to be the society’s exclusive provider – not necessarily for the province but for one or more regional zones. To further cloud the issue, what has yet to be agreed upon between the society and the local providers is the bottom line: the cost of not just the basic funeral service fees, but of all those services and merchandise items not covered in the society’s current contract. That’s where there will be considerable negotiation between the providers, says Toren. “They’re only just beginning to play hardball.” There is also the issue of crematoria, and the fact that the corporates own most of them. If a company such as SCI is not one of those shortlisted, it will still be in a position to determine what cremation rates will be, regardless of the society’s best efforts. And there’s one further hitch: the 207,000 MSBC membership cards out there are printed with the phone number, not of the non-profit ¬society, but of the SCI-owned First Memorial funeral homes. According to Johanson, it’s not only the public who’s confused about who’s who. “The Memorial Society faces a branding problem,” he says. “Not only does the public think they’re the same, we’ve heard Service Corp. International managers come into our office here and say – and I quote – that they consider the Memorial Society a ‘sub-brand’ of First Memorial. Which I think is arrogant.” To combat this confusion, the society is reissuing cards with the society’s phone number to members, but getting them into 207,000 member wallets is unlikely to happen overnight. Meanwhile, if SCI does not win back the contract and someone mistakenly calls First Memorial on the event of a member’s death, what are the chances that the SCI employee on the phone will redirect callers to the society’s new provider? Finally, most funeral independents in the Lower Mainland and Victoria have matched the “preferred price” for society members anyway. The rates of some providers, such as CARE Funeral Services in Victoria, are even lower. Says CARE’s William Buckley, “[MSBC] wants to dictate to the industry what prices to charge their members. I’m a free enterpriser and I’ve ¬chosen as a free enterpriser to offer my ¬services at a lower rate than they’re already offering.” Most likely, the losers in the MSBC lotto will continue to match prices or, in the case of CARE and some alternatives, beat them. So what happens now? Key players such as Crean and Little aren’t talking. Crean directs BCBusiness to an associate on the Sunshine Coast who is in charge of the Family Funeralhome Association’s negotiations. Little says, “Call me in a month.” It seems impossible that the various players will ever get in that room and “agree on what day of the week it is,” but the day of reckoning is still scheduled for September 2006. All the society needs now are the right pallbearers. Dying for a Deal The Players Three fractious factions are bidding for the Memorial Society of B.C. contract this September:
What’s at stake: $35 – $50 million The average funeral in Canada costs between $7,000 and $10,000, making the Memorial Society of B.C. contract worth $35 – $50 million annually. But most people join the society planning to pay considerably less. They want a cheap exit that frees grieving relatives of the burden and expense of a big funeral. For a $20 registration fee, members get what the society describes on its website as “preferred pricing on funeral services available only to society members.” What you get First Memorial’s most basic funeral for MSBC members is the “immediate disposition,” meaning no memorial service or gathering, no visiting the deceased, no ceremony. Just a cremation, the ashes returned in a cardboard box. Period. Total: $1,091. The same package can be found from any number of non-MSBC funeral providers for less, starting at $599. First Memorial has MSBC member prices for a memorial service ($891), graveside service ($1,143) and funeral service with the deceased present either in their chapel or at your place of worship ($1,312). However, these fees do not include cremation, interment or any of what the society’s Johanson and Toren like to call the “other things.” Competitors will match the fee for these basic services, but you have to know to ask. Mattresses and caskets, for example, are made by the same manufacturers but every line is slightly different, defying direct price comparison. And those arranging funerals are too often in no frame of mind to shop price.