“For me, I think that I don’t like feeling pressure from outside sources. I’d rather put the pressure on myself and push myself to do it as good as I can.”      –Jay Hernandez, actor

  When you hear the voice of pundits telling you in detail what you are doing wrong and how you must redesign your business, I remember a quote from Mark Twain, “The public is the only critic whose opinion is worth anything at all.”

  These thoughts came to me as I was looking over Funeral Consumer Alliance’s most recent funeral home survey entitled “An Oversaturated Market 2014”. Every few years FCA looks at the number of funeral homes in a state, the number deaths within it and the number of funeral homes serving those deaths. Through their own deduction of what an average funeral home should do in a week, they make their recommendations on how many funeral homes should serve that state. Their verdict, which should surprise no one, is that there are way too many funeral homes in America, therefore charging inflated prices.

  This survey has always confounded me as to its purpose and the formula for its conclusions. I finally had to contact Funeral Consumer Alliance’s Executive Director Josh Slocum to comment.

  Slocum’s formula for the number of funeral homes needed is based on one funeral per day, five days a week, fifty weeks a year (he is kind enough to give us two weeks off per year).

  In the Northeast, New Hampshire has 90 funeral homes yet needs only 41; Massachusetts has 519 funeral homes, yet needs only 210; New Jersey with 660 funeral homes needs only 278 and New York with 1579 funeral homes needs only 586. In the South, Florida has 831 funeral homes yet needs only 695; Alabama with 407 funeral homes needs only 192; Georgia with 572 funeral homes needs only 285.

  In the more Central part of the country, Illinois has 1027 funeral homes yet needs only 400, Iowa with 397 funeral homes needs only 111, and Wisconsin with 496 funeral homes needs only 189.

  The Western part of the United States is underserved, according to the FCA formula. California has 806 funeral homes, yet needs 936; Arizona has 144 yet needs 187 and Nevada has 52 funeral homes yet needs 78. Texas and Colorado fall back in the over-served column with the Lone Star state having 1128 funeral homes needing only 666; the Rocky Mountain state having 182 funeral homes with only 126 needed. Please contact me for the entire survey or you can also find it on FCA’s website.

Q: Josh, In your chart of “An Oversaturated Market 2014”, you come up with a formula for how many funeral homes should exist. I don’t understand the one funeral a day, Monday through Friday, etc. Is this what you think a funeral home should be doing without “abusive mark-ups”?

REPLY: No, we don’t think that funerals are going to happen Monday through Friday, obviously. This is a model, an approximation. It cannot capture the actual variations, and we don’t even imply that we think funeral service could operate that way.

  As a general rule of thumb, however, it does bear out. We do, in point of fact, find that funerals on average cost more when there are “too many” firms competing for too few calls. This isn’t an ideological position, it’s simple arithmetic that derives from the fact that there is a limited number of customers per population. More funeral homes per population necessarily means fewer calls all around “on average”. But it doesn’t mean funeral home costs and expenses go down. They remain. So how to pay the bills? Prices have to be higher.

  Josh, in any business scenario, when there is competition, someone will introduce lower prices. If another firm survives that, it is proving itself to be the Starbucks or the Nordstrom’s of their area.

Q: What about firms doing almost all cremations versus the firm doing almost all burials after visitations?

REPLY: We find that those firms are usually operating on a far more sensible high-volume model anyway. Take a look at storefront cremation-only or arrangements-office-only firms and their prices. You’ll notice they’re usually on the lower end. High volume is what makes this possible.

Q: What about the large firms such as Frank E. Campbell doing ample business but being very expensive?

REPLY: Steve, I’m not sure why you’re asking this, since I know that you know Campbell is owned by SCI, and that you know it’s a prestige firm that can command the price it’s asking merely based on its name and the fact that it’s buried so many celebrities.

  Josh, what you don’t understand is that a lot of communities have their own “Frank E. Campbell’s” – funeral homes that provide prestige service that families will and do pay extra for.

Q: How has 2014 compared with your past studies?

REPLY: I haven’t compared them line by line, but the trend is still the same: more funeral homes per capita, generally higher prices. A few thousand funeral homes have gone under or merged in the past 5-10 years, though, so the absolute rooftop numbers are slightly lower on average.

Q: Should there be some regulation for funeral homes not meeting these criteria?

REPLY: I don’t even understand this question. Are you honestly assuming that this chart means that we think the government ought to cap the number of funeral homes? Do you “really” think we’re that ridiculous, Steve?

  Be serious Josh. In 2005 FCA filed a lawsuit in federal court in California against Service Corporation International, Alderwoods, Stewart Enterprises and Batesville Casket Company accusing them of shutting out competition and fixing casket prices. FCA lives on getting unknowing legislators to file bills to have funeral service licensees and locations practice as FCA sees fit. If you could, I believe you would.

Q: Don’t you think the market can take care of itself?

REPLY: Yes, if the state funeral boards and legislators would stop enacting anti-free-market regulations designed to protect full service funeral homes under the guise of “consumer safety.” A great example is your own state of Arizona, which relegates crematory operators to dealing only with full service funeral homes and prohibits them from serving the public directly. No one has yet explained how that’s necessary and why Arizona is so different from other states that lack this prohibition and having thriving direct-cremation businesses.

  Josh, this is where we will always disagree. The market does take care of itself. These funeral homes exist, study after study, because enough families want them to exist. The vast majority isn’t agreeing with FCA’s philosophy of what a final care disposition firm should be. They want the funeral director that they know to be there for them when the need their services. If this were not true, your magic formula would have been achieved years ago.

  “Consumers are always in control of any situation...no matter what the purchase is...they carry the power of the word NO!!!!”      –Brian Miller (comment left on FCA’s website regarding survey)