Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, August 22, 1993 TAG: 9308200385
SECTION: BUSINESS PAGE: B-1 EDITION: METRO
SOURCE: KATHLEEN WILSON STAFF WRITER
DATELINE: LENGTH: Long
When David Arritt's car broke down, he rushed it over to the local garage in Covington.
That was on a Thursday.
"They told me they were all backed up and wouldn't even be able to look at it until the following Tuesday," he recalled.
That got Arritt to thinking.
"What in the world would they have thought if it were my services they needed, and I told them we couldn't possibly get around to it until next week?" he wondered.
The car in need of repair was a hearse.
David Arritt works for Arritt Funeral Home.
He's part of a business providing what most consider an essential service, an operation that almost never closes its doors but yet one that's largely misunderstood by consumers.
Americans spent $8.3 billion on funeral services in 1990, according to the U.S. Commerce Department's Bureau of Statistics. Directors of Roanoke area funeral homes estimate the average funeral costs at around $5,000.
Multiply that by the number of resident deaths in Virginia - 49,023 in 1991, the most recent figure - and Virginians spend about $24.5 million a year on funerals.
"Nobody should spend that much money in such a short time with so little thought," declared Sam Oakey of Oakey Funeral Service. Oakey's, with four locations and 1,400 funerals a year, is this area's largest funeral home.
And it's getting larger. Oakey's is in the midst of a $400,000 renovation and expansion of its downtown Roanoke chapel.
Just about every area funeral service professional has served an apprenticeship with Oakey, the company's president and chairman of the board.
"Even when you buy a car or a TV you look at Consumer Reports," he pointed out.
Indeed, the funeral ranks as the third largest expenditure of a lifetime for most people, right behind buying a house and a car. Still, folks aren't exactly lining up to be the first to face their own mortality.
And it's an understatement to say that running a business that sells the one thing nobody ever really wants to buy is a challenge.
"Everyone wants to go to heaven," said J.B Lewis of Lewis Funeral Home in Lexington. "But nobody wants to die."
"And it doesn't help any that funeral directors are notoriously the worst businessmen in the world," added Wayne McWilliams of Lotz Funeral Home in Roanoke.
"We tend to adopt that `Don't worry about it now; we'll work it out later' attitude when it comes to discussing financial arrangements," explained McWilliams.
That's just one of the reasons funeral directors have a hard time running their operations for what they are: businesses.
And at the top of the list of their problems is one that all businesses share: collection of debts.
No area funeral director was able to estimate a percentage figure for uncollected debts. But when asked what they do when a family can't even afford the most modest and cursory funeral services and merchandise, each gave the same answer:
"We just give it to them."
Through Roanoke's welfare department, so-called welfare burials are farmed out to area funeral homes.
Funeral directors provide what is necessary to get the job done: transportation and preparation services, a casket and staff. Most arrange for a minister to perform some type of religious service.
For all of this, the city pays each funeral home $255 per welfare burial.
At Hamlar & Curtis Funeral Home in Northwest Roanoke, a welfare burial includes visitation and can even include a guest book.
"We can't very well tell folks they can't come and see the deceased because he didn't have any money, can we?" asked Fred Galloway of Hamlar & Curtis.
And Galloway said he isn't ashamed of how his company handles welfare burials.
"Go ahead in and take a look," he said motioning a visitor toward the casket of a charity client.
The deceased was modestly dressed in a open-neck sport shirt.
"The reason he isn't wearing a tie is because the family told us he never wore a tie," asserted Galloway. "But if they'd wanted a tie, we'd have given him a tie."
The next day, he said, four of Galloway's employees would accompany the body in a $70,000 hearse to the cemetery for burial.
If Galloway sounds defensive it's because Hamlar & Curtis has been the brunt of some bad word-of-mouth publicity.
For years, urban legend has had it that if you can't afford to pay for your funeral up front, Hamlar & Curtis will embalm the body but refuse to release it until someone pays for the services.
Galloway has heard that story before.
"It's just absolutely false," he said. "Either you or the city will pay for the funeral. And either way, we do it. Even if it is at a loss to the funeral home, which often it is."
Why, he asks, would they hold the deceased's remains when the storage fee would be prohibitive?
Back in the 1970s the Federal Trade Commission instituted the Funeral Industry Trade Rule. After finding irregularities in the way funeral homes outlined their charges, the agency attempted to make it easier for consumers to compare one mortician's services and products against another's.
Since then it has become law that funeral homes provide a complete itemized breakdown of all of their charges for various services and merchandise.
"The FTC really did [the] funeral service a favor, by forcing us to become better businessmen," said Arritt, who last year served as president of the Virginia Funeral Directors Association.
But according to some area funeral directors, itemizing prices has forced the business to appear as if it were nickel-and-diming the bereaved.
Before the FTC intervened, for example, a funeral director probably would have included a crucifix as part of his package of services for a Catholic funeral.
Now the crucifix must be listed - menu-style - on a general price list. It'll cost you $14 at one place, $7.50 at another.
Other a la carte funeral services include: Dressing, cosmetology and hairdressing, which locally ranges from $50 to $100. Use of a hearse: $100 to $140. Use of funeral home facilities for visitation: $75 - $100 for each night or portion of a day.
On the surface, most funeral directors agree, the prices look outrageous.
But that's because most people don't really understand the mortuary business.
"Funeral directors are afraid to tell people just how much our services really do cost us," Arritt said.
They contend they must charge fees that are reasonable for what it costs to maintain and keep open a building that is likely to be empty most of the time.
And in terms of maintenance, funeral directors liken their business to a hotel.
When a child spills a Coke on the sofa in a funeral home, the director can't simply turn the cushion and tell the child to eat in the kitchen - and not the living room - from now on.
The funeral director must bring in a professional cleaner or possibly reupholster the sofa.
The various controversies surrounding the funeral service come from what Arritt describes as "hiding costs in the casket."
Many funeral directors, he says, price the services they offer far below what they actually cost to provide. Then, they jack up the price of the casket.
A consumer who selects a funeral home for the low cost of its service likely will be paying a 400 percent to 500 percent markup on funeral merchandise, specifically the casket.
"A funeral director presenting prices the way he should would charge somewhere between $1,800 and $3,000," he estimated. At Arritt Funeral Home a full-service traditional funeral costs $3,000.
Funeral directors who cut the service fee and increase the casket price are responsible for the negative publicity the funeral industry receives, said Arritt.
But, he added, now that consumers are doing comparison shopping and have increased understanding about funeral service costs, funeral directors are learning they don't have to play pricing games to garner business.
Consumers understand that good service costs more. And most are willing to pay for it. There's no need to hide costs in the casket.
"I've tried to think of other businesses that parallel ours," said Curtis Storey of John M. Oakey & Son in Salem. "The only one that even comes close is the hospital emergency room."
That's because, Storey said, ER prices are high to compensate for the unpredictable nature of the business. Funeral homes, like hospitals, have to be staffed 24 hours a day, 365 days a year with highly skilled personnel who must respond and perform on very short notice.
Mike Williams and his father, Tommie, realized a lifelong dream when the two opened Williams Funeral Home in Lexington last June.
The preparation room is state of the art, drawers filled with shiny new surgical instruments. The chapel, which seats 170, has a brand new organ and a custom-designed nondenominational stained glass window.
Dozens of brass chandeliers glisten over the lush, yet tastefully decorated rooms. Rooms that look better than a decorators' magazine cover.
And in an effort to appeal to the local population, one wall displays portraits of Jackson and Lee.
Theme songs from modern movie tragedies - such as "Brian's Song" and "Love Story" - fill the air via a sound system.
And out in the garage, a fleet of brand new cars. A new Cadillac hearse cost $65,000.
Williams estimates the start-up costs are now "close to seven figures."
Eight weeks after opening, Williams Funeral Home had handled two funerals.
"It's very difficult getting started," he admitted.
That's because his competition includes what many people in the town of Lexington refers to simply as "the funeral home" - Harrison Funeral Home, founded in 1867.
Williams claims his prices are lower.
But, his dilemma is getting the word out that he's underselling the competition. Advertising, according to interviews with Roanoke area funeral home directors, ranks third among their biggest problems, after debt collection and lack of understanding pricing structure.
They cannot solicit your business door-to-door or by phone. If they contact customers by mail it can only be through a bulk mailing.
In fact, funeral homes are bound by ethics, restrictions and regulations similar to those governing doctors.
Once, when a competing funeral home did attempt telephone solicitation, Harrison Funeral Home ran this ad: "If the phone rings, it isn't us."
Recently, Sam Oakey was approached to consider display advertising at the Franklin County Speedway.
"I wouldn't touch that with a 10-foot pole," he said.
Stock car races aside, funeral directors have a hard time promoting their services.
"I can't exactly say `Hey, we're like Food Lion. The same low prices every day,' can I?" asked Lotts.
Instead, the funeral industry is promoting comparison shopping and prearrangement. By planning a funeral today, a customer conceivably can buy a 2023 funeral at 1993 prices.
Most funeral directors invest such advance payment in an insurance plan or trust account. Payments by the customer can be made monthly, quarterly or annually, depending on the buyer's age and health.
The quarterly dividends are reinvested in the policy. A bonus is that the funds are not counted as an asset in computing the individual's wealth against Medicaid eligibility.
And there's the possibility of a profit to be returned to the estate.
Lorraine Cunningham, who has handled more than 600 prearrangements for Oakey's, admits that sometimes the funeral industry's prices increase more than the policy rate. The advantage to the funeral home is that when the time comes, they are guaranteed your business.
"In preplanning, the financial consideration is secondary," she said. "The primary concern is in not leaving problems for the family."
by CNB