State funeral homes changing ownership

By Dan Nakaso
Advertiser Staff Writer

Mark Ballard, a former funeral home owner from Kentucky, quietly bought two Neighbor Island mortuaries and a cemetery last month and began pushing the pendulum of Hawai'i's funeral business further away from corporate ownership.

Ballard's purchase of Borthwick Hawai'i in Hilo, Borthwick Mortuary Maui in Wailuku and Valley Isle Memorial Park on Maui on Jan. 14 represents the second breakup of a major Island mortuary operation since 2001.

The two sales follow a pattern of ownership changes throughout the funeral home industry that began in the late 1980s and early 1990s when small chains and independent, often family owned, businesses were gobbled up by large corporations.

By the late 1990s, however, economic forces pressured the corporations to start selling their properties back to smaller operations.

What's unclear is whether more chain-owned funeral homes will be sold in Hawai'i and what the effect will be on the industry and consumers.

"I don't know what it means, either," said Mendel Borthwick, 77. He sold the family's then lone-Borthwick Mortuary in 1980 and watched the operation expand to the Neighbor Islands and change hands three times.

"I do know these huge corporations that bought Borthwick and all of these others expanded so rapidly that they got themselves into some real trouble," Borthwick said.

Hawai'i has 22 to 23 funeral homes, some of which trace their heritage to the 1800s. "But you can count the number of independent, family-run funeral homes on one hand," said Mitchell Dodo, president of the Hawai'i Funeral Directors Association.

Ken Ordenstein, 50, is a scion of five generations of Hawai'i funeral directors that began with his great-great-grandfather, Manuel Enos Silva. Silva was a carpenter who made coffins in the late 1800s and started his own Honolulu funeral business, which evolved into Ordenstein's Mortuary on Kukui Street and a small chain of other funeral-related operations.

Ordenstein watched his parents sell his namesake business in 1997 to Lowen Group Intl., a Vancouver-based company, only to see the corporation enter into bankruptcy two years later. In 2001 a hui of local investors called Rightstar Hawai'i Management Inc., a private company, bought the assets and returned them to local control.

Ordenstein is now Rightstar's chief development officer and — like many others in the industry — isn't sure what will happen next.

"How these big publicly traded companies retrench and reorganize and divest are being worked out as we speak," Ordenstein said.

With the sale of two of the Borthwick mortuaries, Rightstar now becomes Hawai'i's largest funeral home owner.

Ballard, 46, and his wife, Laura, sold their two funeral homes in Kentucky and two others in Indiana and opened Ballard Family Mortuary in Kahului, Maui in 1996. Ballard wanted to expand and began talking to SCI Hawai'i, which owned seven Hawai'i funeral operations, including four Borthwick mortuaries.

SCI Hawai'i is an arm of Houston-based Service Corporation International, "which went through the process of determining which locations it wanted to keep ... and those that it wanted to spin off," said Scott Sells, vice president of operations for SCI Hawai'i.

Ballard said he's happy with his expansion and has no plans to acquire any more mortuaries or cemeteries for now.

"The opportunity was there. They were offered to us and it made good business sense to us," Ballard said. "You would never say no (to another purchase) but I think we're happy right now. But you never know when the opportunity will come."

Dodo believes that most customers are unaware of the dramatic ownership changes that have taken place in Hawai'i over the past decade.

They can, however, sometimes see the results in personnel changes, he said.

"Here in Hilo we saw one company that went through three or four different managers in two- and three-year terms, coming and going for whatever reason," Dodo said.

Ultimately, customers don't really care, Dodo said, as long as they're satisfied.

"But if they get bad service," he said, "you can be certain that they'll spread the word to their friends and neighbors that they were unhappy with Funeral Home X, Y or Z."