Corporations Buy out State Funeral Homes

Article excerpt

Journal Record Staff Reporter Chunks of Oklahoma's funeral business, traditionally dominated by local, family-owned entities, are being bought by corporations based in Canada and Houston _ a fact that concerns some independent funeral directors.

In the Oklahoma City metropolitan area, 10 funeral homes and three cemeteries are corporate owned, and statewide, some 34 funeral homes, or about 10 percent, of the approximately 330 funeral businesses are corporate owned.

The publicly traded companies acquiring them are Service Corporation International in Houston, and The Loewen Group Inc. in the Canadian province of British Columbia.

Jay Baines, executive director of the Oklahoma Funeral Directors Association, said corporate ownership has been around for about 10 years.

"The way I look at it is, the funeral industry has been one of the last industries to be owned in a corporate-type manner," he said.

Locally, Service Corp., older of the two, owns Hahn-Cook-Street & Draper Funeral Home, Capitol Hill Funeral Home, Resthaven Mortuary and Hunter Funeral Home, all in Oklahoma City. The company also owns three area

cemeteries: Chapel Hill Memorial Gardens, Rose Hill Burial Park and Resthaven Memorial Gardens.

Area funeral homes owned by The Loewen Group are Guardian North, Guardian West, and Guardian Mid-Town funeral homes in Oklahoma City; Guardian-Mayes Funeral Directors in Norman; and Gaskill Funeral Chapel and Resthaven Funeral Home, both in Shawnee.

The death of Bill Merritt, a prominent area funeral director, also has fed a strong rumor that negotiations are under way for a corporate purchase of Bill Merritt Funeral Services & Crematory, a group of four homes in Oklahoma City, Mustang and Yukon. An employee at the business said the family still owns the company, and nothing has been done at this point.

Gary Tucker, regional manager for Loewen, said as funeral directors get older, they may not have a family member on board to step in and run the business.

"In the past, a family grew up in the industry," he said. "You're finding, as in other industries, the sons are no longer wanting to stay in the same industry, and they're moving on to something else." Tucker said that basically leaves the owner two opportunities: one, to sell the business to an employee, "which is, quite frankly, a situation where it takes some money down and payments over the next 20 years to get it paid for." Another option is to sell to a corporation at an attractive price, pocketing the cash buyout in a lump sum all at once, Tucker said.

The downside, argue independent owners, is that the number of small, locally owned businesses dwindles. Community involvement and quality of service inevitably will suffer, they believe, and they don't see how out-of-state and foreign corporations can muster the same kind of interest that local residents have.

"This country was built on private enterprise and small business ownership," said Joe C. Kernke Jr., owner of Smith & Kernke Funeral Directors in Oklahoma City.

"I just think it's a better system to have smaller, more personalized, community-involved people." Scott Smith, owner of Vondel L. Smith & Son Mortuaries and Crematoriums, said publicly held companies expect to see a return on the investment, so prices go up and quality of service may be sacrificed.

"They start losing their perspective on providing quality service, because it's a numbers game and they're trying to make a bottom-line profit for people buying shares," he said.

"And the management is so far removed from sitting across a desk from a bereaved family; they don't have any idea of how it is to be sitting in the trenches." A July article in The Wall Street Journal quoted William Heiligbrodt, Service Corp. president, as saying that earnings and revenue gains indicate the company's funeral home operators are producing more money per funeral, and holding expense increases down. …