CentroMedico III

Summary of Proposed Investment

This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only.

Project number	27603
Company name	Controladora de Servicios Medicos S.A. de C.V
Country	Mexico
Sector	Health Care
Environmental category	B
Department	Health and Education
Status	Active

Date SPI disclosed	February 18, 2009
Projected board date	March 20, 2009
Previous Events	Invested: November 9, 2009 Signed: June 9, 2009 Approved: May 11, 2009

View Environmental & Social Review Summary (ESRS), click here

Overview

Sponsor/Cost/Location

Development Impact

Contacts

Attachments

Project description

The proposed project involves the construction of two new 40-bed hospitals in the cities of Tepic, State of Nayarit, and Colima, State of Colima, in Mexico. The new hospitals will offer general primary, secondary and tertiary care and will add to the existing ambulatory surgical center and 86-bed hospital that the company operates in northern Guadalajara, as well as the 60-bed hospital under construction in southern Guadalajara. In addition to the new hospitals and in line with past projects, this new Project also includes the construction of medical offices to be sold to third party doctors; in this Project, around 40% of the office space will be leased rather than sold.

Anticipated development impact of the project

The project will:
- increase access to healthcare for underserved populations,
- deepen reach to lower income market segments,
- increase the availability of high-skilled employment in the Tepic and Colima metropolitan areas.

IFC's expected development contribution

Participation in this project would allow IFC to support the expansion of high quality affordable health services in Mexico. In addition to long term financing, which is not easy to obtain for private hospitals in Mexico, IFC would be providing its global health care experience and its focus on financial discipline, an increasingly important aspect for Centro Medico given its longer term growth plans. IFC will also be help diversify the company’s sources of funding by bringing the Inter-American Development Bank into the project.

Environmental and social issues - Category B

This is a Category B project according to IFC’s Procedure for Environmental and Social Review of Projects because a limited number of specific environmental and social impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. Key environmental, health and safety, human resources and social issues in a project in this industry sector include the following:

1. PS1- Social and Environmental Assessment and Management Systems – CentroMedico Puerta de Hierro (CMPDH) has implemented a systematic approach to management of internal affairs, environmental and occupational health and safety, and other hospital management considerations. CMPDH mitigates potential impacts from hospital operations through adherence to and the institutionalization of procedures based upon regulations promulgated by the ministries of Environment, Health and Civil Protection. Thus, for example environmental health and safety procedures are oriented to energy savings, minimization of water consumption, management of dangerous wastes in accordance with Mexican regulations, and ongoing monitoring programs. CMPDH’s existing hospital at Zapopan originally planned to establish and operate a formal quality management system that met the requirements of ISO 9001:2000 and certification was to be obtained as part of the previous investment. After consideration of the benefits of ISO versus more health care oriented certifications, its business model and other considerations, CMPDH decided to obtain Certificacion de Establecimientos de Atencion Medica (Health Care Institutions Certification) from the Mexican Ministry of Health as well to seek Joint Commission International (JCI) certification. The JCI assesses health care organizations to determine compliance with a strict a set of standards and requirements designed to improve quality of care. CMPDH’s Zapopan Hospital will receive its Health Care Institutions Certification in February 2009 and will obtain JCI certification in accordance with the attached environmental action plan (EAP). CMPDH will transfer and adapt the existing Mexican government-certified management system to the new hospitals at Colima and Tepic once construction is complete and each is in operation. Subsequently, both hospitals will obtain the Mexican Ministry of Health certification in accordance with the attached Environmental Action Plan (EAP).

CMPDH does not currently hold meetings with stakeholders to inform them of hospital operations and upcoming activities seek their input and provide them with a grievance mechanism to air complaints about hospital operations and other concerns. CMPDH will develop an active program for the two new hospitals and prior to the commencement of construction will institute an active and ongoing program to keep host communities informed and facilitate receipt and response to all community grievances.

2. PS2 – Labor and Working Conditions - CentroMedico’s Human Resources (HR) policy and procedures principally address acquisition and placement of new employees. Subcontracted employees are required to comply with CMPDH procedures and policies applied to permanent CMPDH employees. The human resource policy and existing procedures are incomplete in terms of labor transparency requirements, employee grievances, and participation in organized labor organizations and associated issues stipulated in this performance standard. CMPDH will revise its human resources policy to incorporate missing elements described in performance standard 2 in accordance with the attached Environmental Action Plan (EAP).

CMPDH provides diverse training to ensure professional capacity and active occupational safety and health prevention and response programs. These programs are subject to the oversight of the Secretar�a de Salud (Ministry of Health). Moreover, labor safety and disease prevention programs, which consist of the following elements, are well developed. When new employees have signed the labor contract, they must provide a current medical certificate including required laboratory test results. Employees assigned to critical areas including neonatal intensive care, pediatric and adult intensive care, operating theatres, dialysis, etc. as well as in nutrition and food services participate in epidemiological surveillance for specifically notifiable diseases. All employees receive Hepatitis B vaccination. In addition, all employees participate in accident prevention training, and all accidents are reported the appropriate regulatory agency. Infectious and contagious disease patients are isolated in accordance with internal and Ministry of Health requirements. CMPDH submits a weekly report to the Ministry of Health detailing new cases of specifically notifiable diseases (monitored in the epidemiological survey) and nosocomial disease. In addition, CMPDH provides specialized training and appropriate personal protective equipment (PPE) for employees handling infected clothing, linens and hazardous health care waste.

3. PS 3 Pollution Prevention and Abatement – CFE the Mexican electrical authority provides electric power from the national grid’s Comisi�n Federal de Electricidad (CFE) to a principal substation for distribution to dry transformers for each building. Engine-driven generators will provide standby electric power and these will be isolated adequately to prevent local noise impacts. To conserve energy, internal lighting will consist predominantly of fluorescent fixtures. CMPDH operating procedures address minimization and recycling of non hazardous waste such as wood, plastics, paper, and cardboard. Current plans include centralized control for lighting and equipment to avoid consumption of energy by unused equipment and lighting. The control system facilitates custom programming and facilitates data collection and trends in electric power consumption. Each host municipality will provide potable water and each hospital will provide further treatment consisting of filtration and softening to ensure the potability of water for hospital operations and critical applications. Both hospitals will discharge sanitary wastewater to public sewerage under permit that municipal government-owned treatment works will treat and disinfect.

Hospital staff segregates wastes from hospital operations into one of the following classifications: municipal solid waste, dangerous biological or infectious waste [biological, infectious waste (RPBI)] and hazardous waste. All wastes are collected for off site management. RPBI is collected in red bags by especially trained staff with appropriate PPE and then transported to temporary storage designed and built for such wastes. Red bag waste is stored in a low temperature chamber, which staff clean daily, and remains locked. CMPDH contracts RPBI collection and disposal to Sterimed SA CV a company licensed by the Ministry of Ecology and Environment for this service. Sterimed collects RPBI daily and provides CMPDH with a manifest for collected waste. Similarly, staff accumulates pathological wastes as well as sharps in yellow bags collected for disposal by Sterimed SA CV. Gen Industrial SA CV, certified by the Ministry of Environment for this service, collects and disposes of municipal solid waste and hazardous health care waste (segregated into specialized containers), and also provides manifests addressing collection and destruction.

4. PS4 – Community Health Safety and Security – CMPDH will engage the services of life and fire safety engineering professionals to review the design of both new hospitals to ensure compliance with IFC life and fire safety requirements addressed in the General EHS guideline. In addition, after completion of construction, the life and fire safety design professional will inspect each building to ensure that the responsible contractor constructed the facility in accordance with the design. As described above, CMPDH hospitals have well-developed waste management programs, employee training and internal disease prevention programs that aid in protection of host communities and patients.

CMPDH will develop and implement a traffic safety program for all vehicle operators associated with the hospital to reduce the frequency and severity of motor vehicle accidents.

5. PS5 Land Acquisition and Involuntary Resettlement - CMPDH is the current owner of the two properties in Tepic and Colima designated for construction of the two new hospitals. CMPDH acquired each property through a willing buyer-willing seller relationship. There were no economic or physical dislocations resulting from transfer of ownership of either property.

IFC PROJECTS

RECENTLY DISCLOSED