When I was a student in the early 90s, we bagged our deceased patients naked. It was a case of "we've always done it this way"-probably a leftover from when patients were shrouded, not bagged. It always made me uncomfortable to do that; I didn't see the point of stripping them naked and couldn't the funeral home just send the gowns, etc, back to the hospital/nursing home? They're certainly there often enough and all our facilities used the same laundry service.
When my grandmother died in 1996, the funeral director told us that the hospital put her in the body bag still in her hospital gown. We didn't view her prior to cremation, so I can't confirm or deny what he said.
My dad died in 2009 and when we went to see him in the funeral home before cremation (we didn't have him embalmed or have a formal viewing), he was still in a hospital gown and covered in white blankets, one underneath him, one on top. The funeral director said that the hospice always sent their patients over in gowns and sheets and that he would return the gowns to them. Dad was probably cremated naked, but he went to the funeral home in a gown and sheet.
