By M.D. Kittle | Wisconsin Reporter
MADISON — It was Benjamin Franklin who coined the sardonic proverb, “In this world nothing can be said to be certain, except death and taxes.”
In Wisconsin, you can add to Old Ben’s epigram the subcategory of the seemingly never-ending dispute between funeral homes and cemeteries.
For years, Wisconsin cemetery owners have worked to bury an 80-year-old law that prohibits joint ownership of funeral homes and cemeteries. Last year, a bill that would have removed the restriction, again, died in committee.
Mark Graul, a spokesman for the Wisconsin Organization for Responsible Consumerism, a coalition of cemetery owners formed to repeal the prohibition, asserts there will be a similar bill introduced “probably very soon.”
There is arguably a greater urgency this time around. Service Corporation International, North America’s largest provider of death care products and services, is poised to purchase Stewart Enterprises, which owns five cemeteries in Wisconsin. The acquisition is expected to be completed by early 2014, contingent on the usual regulatory clearances.
SCI would take on the Wisconsin cemeteries at its own peril.
Under existing law, SCI would run afoul of the segregation law and, unless the law is changed, the death services company would have to divest or shut down its 15 Badger State funeral homes or the cemeteries included in the merger. That would cost Wisconsin jobs, WORC warned.
Cemetery owners say the law is anti-free market. Graul goes as far as to describe the prohibition as a perversion of the free-market system, a killer of competition, ultimately hurting the consumer.
Wisconsin’s funeral home directors agree that the cemetery owners’ legislative campaign is all about the free market — a campaign by privately owned cemeteries and mega players like SCI to monopolize the death-care services industry. If that happens, funeral and burial costs will soar, the Wisconsin Funeral Directors Association predicts.
“The Legislature in 1933 had the wisdom to bifurcate these two industries to help families in their time of need,” said Adam Raschka, acting executive director of the WFDA. “This is the most difficult time in their lives. People are grief-stricken and can be taken advantage of.”
David v. Goliath?
Eleven states have some kind of restriction on what are known as combination firms, or “combos” — firms that jointly own and operate funeral homes and cemeteries. Wisconsin and Michigan maintain the strictest prohibitions.
Raschka and members of the association see the rapid growth of big-chain death care providers like SCI as a battle of small, independently owned funeral homes versus conglomerates. Once the giants move in, funeral and cemetery prices may go down in the short-term, but prices inevitably rise after small funeral homes are driven out of business, Raschka said. He pointed to a “60 Minutes” investigation in the latter 1990s that spotlighted SCI’s purchase of several funeral homes and cemeteries in the Tampa, Fla.-metropolitan area. The mass acquisitions, according to the TV news magazine, drove up funeral service prices by nearly $1,000 within 18 months at one funeral home in particular.
The takeaway from the “60 Minutes” piece: Consumers are generally clueless when it comes to death care pricing. That’s understandable. People typically don’t shop around when it comes to funeral and burial services.
SCI did not return a call seeking comment.
Cristina Camacho, funeral director of Steil Camacho Funeral Home and Crematory in Darlington, said she is not “anti-corporate,” but she does fear the fall of small-town funeral homes at the hands of rapidly growing chains like SCI.
Until the 1980s, the funeral industry was defined by locally owned funeral homes nationwide. The family owned businesses, many that began as town cabinet makers and furniture stores, served generations of families. That is until Houston-based SCI set out to revolutionize death services by “acquiring and consolidating smaller companies into large, scalable operations,” according to Naomi Warmate-Igwe, contributor to Seeking Alpha, an online stock market news and financial analysis site.
“The company has been successful in achieving this mission as evidenced by its position as the largest publicly owned funeral services company in the U.S.” she writes.
SCI owns some 1,450 funeral homes and 374 cemeteries in the United States, Canada and Germany.
In small towns like Darlington, located in southwest Wisconsin’s agriculturally rich Lafayette County, cemeteries are owned by communities and churches. The 80-year-old anti-combo law doesn’t have much impact on such rural funeral homes, but Camacho said it protects independent operators from encroachment by big-chain death services providers.
“We’re small town people who expect their neighbors to be serving them when they need help,” she said. “We still have radio stations that have our obituaries on during their newscasts.”
Raschka said lawmakers and residents must be satisfied with the law. The state Supreme Court has upheld it on a number of occasions, and in the early 1990s the Legislature strengthened the law after a similar push at repeal.
But what has it done to the spirit of the free market?
Graul said the law “perverts the market” by demanding the segregation of two complementary services. Instead of having the option of convenience, of one-stop shopping for a service that is so deeply connected to grief, Graul said mourning family members are forced to go to separate providers.
Glen Porter, president of Highland Memorial Park in New Berlin, put it this way last year:
“This regulation makes as much sense as passing a law to force fans at Lambeau Field to buy their brat at one stand and their beer at another. Cemetery owners in Wisconsin believe healthy competition will improve customer service and lead to lower prices.”
Cemeteries face another challenge in the marketplace: The dramatic rise in cremation services.
“When nobody is talking about going to the cemetery, we’re shut out of the conversation,” she said, calling the anti-combo regulation a “nonsensical, protectionist” law.
The law “limits us from the conversation,” she said.
Toson Hentges said the average consumer has no idea the law exists.
“We’re not out there to ruin anybody’s business. We’re out there to open up the market and give consumers a choice,” she said, noting any bill wouldn’t restrict consumers from using stand-alone funeral homes and cemeteries.
Joint ownership makes up a relatively small portion of the death services market. A study last year by the libertarian Cato Institute estimates 4.4 percent of funeral homes and 13.2 percent of cemeteries are part of combos in the 39 states that allow them.
The study found the number of combos grew by 8.6 percent between 2005 and 2012, a trend driven by consumer demand and economies of scope.
Cato asserts significant cost savings would be realized in repealing anti-combo laws in the 11 states that enforce them. The study takes a cold market approach to its estimates.
“We estimate that society will save at least $266 million over the next 20 years on caring for its dead if anti-combo laws were repealed,” the study asserts. “That money represents real resources that are being wasted because of the laws, (examples given), workers twiddling their fingers, empty visitation rooms, and duplication of arrangement conferences.”
Cato said the estimates do not include losses to consumers from limiting their choice of funeral homes.
Now, Toson Hentges said, the law could lead to lost jobs and confusion for grieving families, referring to the proposed SCI merger.
“There’s an easy solution to this problem. The Legislature should act quickly to pass legislation to prevent potential job loss and allow the free market to work for funeral homes and cemeteries like it does in just about every state in the country and every other industry in Wisconsin,” she said in a statement.
Contact M.D. Kittle at [email protected]