The Body Trade - Part 3: Company makes a fortune selling donated bodiesBy JOHN SHIFFMAN and BRIAN GROW
November 12. 2017 9:18PM
PHOENIX, Ariz. — In 2008, a thriving company named Science Care Inc. developed a 55-page national expansion plan. The internal document projected the yield on raw material to the decimal point and earnings to the dollar.
The goal: to maximize profits from the sale of human bodies donated to science. The company’s model for ensuring quality: McDonald’s Corp.
Science Care founder Jim Rogers aimed to provide customers with the same cuts from cadavers no matter which Science Care branch handled the order. That’s why he cited production methods perfected by Ray Kroc, the visionary who turned a hamburger stand into a fast-food empire, said an executive who worked closely with Rogers.
“He used the McDonald’s analogy that no matter where you go, you get the same exact thing,” the executive, former quality assurance director John Cover, said in a 2009 sworn statement.
From 2012 through 2014, Rogers and his co-owner, wife Josie, parlayed the donated dead into at least $12.5 million in earnings, according to Internal Revenue Service audits and court documents reviewed by Reuters.
The two likely earned millions more from Science Care in the dozen years before and after that period. And in 2016, they sold Science Care to a billion-dollar private equity firm. Terms were not disclosed, but the sale included this unusual asset: written pledges from more than 100,000 people to donate their bodies to Science Care when they die.
Last year, Jim and Josie Rogers bought a custom-built airplane and two luxury homes near Phoenix. They also own property in Hawaii and near a ski resort outside Telluride, Colorado.
Jim Rogers, 49, declined interview requests. In a statement to Reuters, he said he sold Science Care to spend more time with his family. The company bills itself as the “world’s leading whole-body donation program,” and Rogers credits Science Care with bringing reliability to the industry.
“Through efficiencies, Science Care has managed to lower costs for researchers, thus better fulfilling the wishes of donors to contribute significantly to research,” he said.
Body donation is distinct from organ donation, the lifesaving process that enables surgeons to transplant hearts and kidneys from the recently deceased. It’s also separate from the harvesting of tendons or bones from cadavers to repair joints in the injured or ailing. Those practices are strictly regulated by the U.S. government. Selling organs and other body parts for transplant is against the law.
In contrast, with few exceptions, it is legal for companies such as Science Care to dissect donated bodies and sell or lease the parts, whether torsos, heads or limbs.
“People have these romantic notions that the world is going to be a better place by donating their body,” said Ray Madoff, a Boston College Law School professor who studies how U.S. laws treat the dead. “We don’t think of businesses using bodies to increase their profits.”
Last year, Science Care received about 5,000 bodies from donors, the company said. From 2011 through 2015, the last five years for which public records are available, Science Care received at least 17,000 bodies and sold or leased more than 51,500 body parts.
The payoff has proved substantial. Science Care has turned donated bodies into about $27 million in annual sales, according to a 2017 government filing. That figure includes revenue Science Care generates by hosting medical training seminars, which enable doctors to train on donated bodies. The privately held company doesn’t disclose its profits.
Medical schools feel strain
Medical school officials in Pennsylvania and Florida report that competition from Science Care and other brokers has reduced the number of bodies donated to schools to train students. Science Care markets itself more aggressively than medical schools, they say, and offers donors more favorable terms, such as picking up the body for free.
“We have lost many donations because of them, and we’ve not been able to meet the needs of our schools,” said Clariza Murray of Humanity Gifts Registry, a state agency in Pennsylvania that coordinates the donation process. “We’re seeing six students per donor in a first-year anatomy lab, when it should be three or four students per donor.”
Current Science Care CEO Brad O’Connell said he has received no complaints from medical schools. Science Care’s marketing in Florida and Pennsylvania should help, rather than hurt, schools there, he said, because it raises awareness about body donation.
Although the company’s donor consent forms state that “Science Care is a for-profit company,” they do not explicitly disclose that bodies or parts will be sold.
A legal practice
Neither Science Care, Rogers nor the company’s new owners have been accused of mishandling body parts. Rivals in the industry praise the company’s professionalism. It has demonstrated how a large, well-run operation can generate rich returns on the people whose remains are its product.
Rob Montemorra, the former chief of the FBI’s national health care fraud unit, says the practice of selling donated bodies is legal. But if anyone is going to profit, Montemorra said, it should be the relatives of the deceased.
“The families don’t realize that a body has tremendous value,” the former FBI official said. “Everybody makes money but the people who provide the raw material.”
Science Care’s new owner, Northlane Capital Partners, is led by veteran private equity investors based near Washington, D.C. Northlane Capital’s other holdings include Potpourri Group, which operates the linen company Cuddledown. Potpourri also runs Whatever Works, an online catalog that markets products ranging from garden tools and kitchen wares to sex toys and pest repellent.
Northlane Capital’s interest in the body broker business didn’t end with Science Care. In February, the partners acquired another major body broker that it merged with Science Care.