THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Monday, July 18, 1994 TAG: 9407160521
SECTION: BUSINESS WEEKLY PAGE: 10 EDITION: FINAL
TYPE: Cover Story
SOURCE: By DEBRA GORDON, Special to Business Weekly
LENGTH: Long : 211 lines
Call him the Sam Walton of funeral homes, but Doug Patterson has never understood why burying someone has to cost so much.
Now Patterson, general manager of Norfolk's Altmeyer Funeral Home, wants to deep-six the high cost of death by offering dirt-cheap funerals and cremations.
In the process, he may just change the way the area's tradition-bound funeral homes do business.
``People are being beginning to wonder why they're burying thousands of dollars in the ground,'' said John Blake, executive director of the Continental Association of Funeral and Memorial Societies, which advises its 500,000 members on how to cut funeral costs
In Virginia, the average cost of a funeral, with casket, is $4,409, reports the Virginia Funeral Director's Association. Altmeyer's traditional funeral service plan is about $2,000, including a metal casket.
To offer that price, Patterson eschewed the traditional funeral home residence, with its deep, plush carpets, polished wood floors and sanctified, hushed atmosphere. Instead, Altmeyer is based in an unmarked cinder-block warehouse in a gritty industrial part of town.
Open the door and you're inside a linoleum-floored office with cheap furniture and a computer. Patterson's wife, Kathy, handles the phones. When she's not there, an answering machine takes over. The embalming room is in the back.
He doesn't maintain an expensive fleet of limousines or even a hearse. When he needs them for funerals, he rents them.
There's no casket room. Instead, Patterson brings a color brochure to your house. If you want to see the actual casket, he has it shipped over to his office from one of the warehouses that national casket companies keep in the area.
``Why should I spend $70,000 a year to maintain a casket room with 20 caskets, when people hate to walk in there anyway?'' said Patterson, who spent three years working for Hollomon-Brown, one of the area's largest funeral homes, before starting the Norfolk office of the West Virginia-based Altmeyer.
Because the funeral ``home'' is so utilitarian, Patterson doesn't do services or viewings in the building. Instead, he goes where the family wants him to perform the service, be it a private home, a nursing home chapel, a church or even the beach.
``Funerals today can be as personal as weddings,'' he said.
Altmeyer, which opened in Norfolk in April, represents a growing trend in the funeral home industry, says Susan Daniels, communications coordinator for the National Funeral Directors Association in Milwaukee.
``I don't think it's anything usual, it's just a matter of choices. When someone buys a car, they have a choice of buying a $10,000 or a $50,000 car; this is no different. This just gives people another choice.''
Area funeral directors are eyeing the new venture skeptically.
``My personal opinion is that they're offering a low-cost funeral, but that's not what all the public wants,'' said Larry Hemenway, general manager at Smith and Williams Funeral Home. ``They don't have the facilities for visitation or chapel service, and there's a lot of families who aren't affiliated with churches and therefore desire the use of the chapel.
``I think only time will tell how he does.''
``They don't have the overhead, the staff working, they don't have people answering the phone,'' said Michael Leonard, general manager of H.D. Oliver Funeral Apartments Inc. ``And most people, when they have a death, require someone to speak with rather than leaving a message. It's very expensive to operate a funeral home in a residential area, and that's one reason why professional charges are going to be higher.''
Funeral homes make most of their profit in two areas - marking up casket prices and in the fees they charge for ``professional services'' - consultation with the family and others, supervision of the arrangements, preparation and filing of documents, etc.
Altmeyer charges $495 for its professional services, about 35 percent less than traditional funeral homes. Its markups on caskets tend to be less too, said Patterson, about 100 percent instead of the 200 percent or more most funeral homes add.
``Other funeral homes take a $500 casket and sell it for $2,000; we sell it for $900,'' Patterson said.
It's a concept that appealed to 68-year-old Harriett Flannery of Virginia Beach. When Flannery decided to plan her funeral last year, she met with a representative from a conventional funeral service, who first asked her how much her life insurance policy was worth.
``Six thousand dollars,'' she told him.
The representative listened to Flannery talk about the simple service and burial she wanted, did some rapid calculations, and presented her with the total - about $5,000 - not including burial plot.
She could easily cash in her life insurance to pay for it, he said.
No thank you, she said.
A couple of months ago, she saw an ad for Altmeyer. Suspicious about the low prices the company offered, she checked it out with the Better Business Bureau and the state Board of Funeral Directors. Then she called Patterson.
He put together a funeral package for her including a graveside service, casket and grave liner and preparation of the body for $2,000. He set her up on a payment plan so she didn't have to cash in her life insurance policy and then he personally took her out to the cemetery to choose her gravesite.
``There are two things I don't believe in: big expensive funerals and weddings,'' Flannery said. ``At your funeral, you're dead; I know where I'm going. It's all for other people. For me, this is perfect.''
Soon, funerals may be cheaper, even at traditional funeral homes.
New Federal Trade Commission regulations that go into effect Tuesday prohibit funeral homes from charging a handling fee, typically $300 to $500, for caskets bought off-site.
This will open up the market and help reduce the overall cost of a funeral, predicts Blake, of the Memorial Societies Association.
``A lot of third-party storefronts are going to break out selling caskets. You could even make your own casket.''
You could even imagine, he says, Wal-Mart selling caskets someday.
More and more people, however, are bypassing caskets altogether and choosing cremation.
Virginia lags a bit behind the national average of 17 to 20 percent cremation, with its rate of 12 percent. But the percentage is increasing, said Joann McElmurray, executive director of the Virginia Funeral Directors Association.
Cremation costs vary across the region. A direct cremation with no service can cost upwards of $1,000, in traditional funeral homes, to the $595 Altmeyer charges.
Until Altmeyer, Colonial Cremation offered one of the lowest cremation prices in town - $625. Four years ago, Colonial opened its doors directly to the public for cremations. Previously, it only provided them through funeral homes.
``We operate on the basis that if someone doesn't need a funeral service, they're just looking for direct cremation, we're the one,'' said Micheal Dan Mills II, manager of the Norfolk crematorium.
Business is steadily increasing, he said, even without much direct marketing.
Altmeyer, however, is aggressively marketing its low-cost concept through display advertising and newspaper inserts.
It's a type of up-front advertising rare in the industry, whose ads typically tout a funeral home's experience and age.
But across the country, Daniels says, funeral homes are beginning to use more modern marketing techniques. The owners of a Wisconsin funeral home, she said, advertise on National Public Radio that they are ``cremation specialists.''
The industry is also consolidating, as large, multistate funeral home companies buy up family-owned businesses.
Other industry trends include preplanning of funerals. Options include planning the funeral without paying for it to funding it through trusts, insurance or savings.
Another is more personalized funerals. McElmurray knows one casket maker in Blacksburg who designs caskets for Virginia Tech alumni; she heard of a Clemson University alum's funeral in which the casket lining had tiger paws on it.
She also predicted increased government scrutiny of the industry, which has only been federally regulated for the past 10 years.
``We can't even play music for a funeral without paying a licensing fee.'' ILLUSTRATION: THE LAST DISCOUNT
On the cover: Photo by JOSEPH JOHN KOTLOWSKI
A MATTER OF COST
Altmeyer Funeral Home is a West Virginia-based company that opened
its Norfolk operation in April. Its niche: low cost.
Average cost of a funeral in Virginia:
$4,409, with casket
Altmeyer's cost: $2,000
Most funeral homes' casket markup:
200 percent and more
Altmeyer's markup: about 100 percent
Altmeyer charges $495 for professional services, about 35 percent
less than traditional funeral homes.
Altmeyer can keep its prices lower because it does not have the
higher overhead costs of full-service funeral homes. Altmeyer does
not have its own chapels, conducting services at sites chosen by
clients. It rents such things as hearses and offers a catalog
instead of maintaining a selection of caskets, though they can be
procured for inspection.
SOURCE: Virginia Funeral Directors Association; Altmeyer Funeral
Home
[Color Photos]
JOSEPH JOHN KOTLOWSKI/Staff
Jim Altmeyer, left, is vice president of West Virginia-based
Altmeyer Funeral Home. With him is Douglas Patterson, general
manager of the operation Altmeyer opened in Norfolk in the spring.
As part of its low-cost approach to funeral services, Altmeyer keeps
few accessories on hand and rents equipment such as the hearse
pictured here.
The company also does not keep caskets on display, offering instead
selections from catalogs. Altmeyer will, however, have a casket
delivered from a local warehouse for inspection.
Another low-cost funeral alternative is cremation, and Micheal Dan
Mills II, manager of Colonial Cremation in Norfolk, says his
business is steadily increasing. Colonial, which until four years
ago had dealt only with funeral homes, offers its service directly
to the public, for about $625, compared to upwards of $1,000 for a
no-service, direct cremation arranged through a traditional funeral
home.
KEYWORDS: FUNERAL CREMATION by CNB