Apollo Loan

Environmental & Social Review Summary

This Environmental and Social Review Summary is prepared and distributed 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 of Director’s decision. Board dates are estimates only.
Any documentation which is attached to this Environmental and Social Review Summary has been prepared by the project sponsor and authorization has been given for public release. IFC has reviewed this documentation and considers that it is of adequate quality to be released to the public but does not endorse the content.

Project number	25969
Country	India
Sector	Health Care
Department	Health and Education
Company name	Apollo Hospitals Enterprise Limited
Environmental category	B
Status	Pending Disbursement

Date ESRS disclosed	April 22, 2009

Previous Events	Signed: June 18, 2009 Approved: June 17, 2009

View Summary of Proposed Investment (SPI), click here

Overview

Category & Applicable Standards

Key Issues & Mitigation

Community Engagements

Client's Documentation

Overview of IFC's scope of review

IFC’s review of this investment consisted of appraising technical, environmental and social information submitted by Apollo Hospitals Enterprise Ltd. (“AHEL” or the “Company”) including: plans for the proposed Apollo Reach Hospitals, various design guidelines (such as architectural briefs, design and build pre-requisites), contract documents, site checklists, waste management authorizations and waste and emissions monitoring data for existing hospitals, etc. This also included a review of the operations and E&S management practices of the first operational Reach hospital in Karimnagar in Andhra Pradesh.

The appraisal also included site visits to AHEL’s flagship hospital in Chennai and discussions with AHEL’s top management as well as the project team in-charge of design and development of Apollo Reach Hospitals.

Project description

Apollo Hospitals Enterprise Limited (“Apollo”, “AHEL” or the “Company”), founded in 1979, is the parent company of the largest private integrated healthcare group in India and recognized as leader in the management and delivery of high quality tertiary care in Asia.

The proposed project by Apollo Hospital Enterprise Limited, the largest private integrated healthcare group in India, involves an investment of up to $200 million over the next several years to fund expansion and equipment purchases for Apollo’s existing hospitals and to develop the Apollo Reach network of hospitals.

Apollo Reach Hospitals have been especially designed for less developed population centers in the semi urban and rural areas of India and are smaller, simpler and offer exhaustive service offerings like Apollo’s existing facilities, deliver similar quality care costing less overall to the patient. The first three Reach hospitals are located in Karimnagar, Kakinada and Karur. Additional Reach hospitals will be established in semi-urban and rural areas, initially in the states of Andhra Pradesh and Tamil Nadu, India.

IFC is considering a $35 million “A” loan and a $15 million stand-by (“C”) loan to partially fund the company’s expansion plan. (“Project”).

Key environmental and social issues and mitigation

The company has presented plans to address these impacts to ensure that the proposed project will upon implementation of the specific agreed measures, comply with the environmental and social requirements including: the host country laws and regulations; IFC’s Performance Standards; and the World Bank Group (WBG)/IFC environmental, health and safety guidelines. The information about how these potential impacts will be addressed by the company is summarized in the paragraphs that follow. Further information is provided in the attached documentation.

PS 1: Social and Environmental Assessment and Management System

AHEL has developed its expertise in managing the hospitals over the years and is recognized for its best practices in India which are at par with international standards. Several of its existing hospitals have international certifications such as ISO 9001 (Chennai) or the Joint Commission International (JCI – for its Delhi, Chennai, Hyderabad and Ludhiana facilities). In addition, many hospitals have been accredited by the National Accreditation Board for Hospitals (NABH) and the laboratories by the National Accreditation Board for Laboratories.

These programs address the key issues such as management of information and human resources, safety of facility, infection control, facility management, performance measurement and continuous quality improvement - among others.

Even for those other hospitals, which are not certified for any such accreditations, AHEL ensures that the requirements of these systems are integrated in the design and operations of all the AHEL hospitals. Corporate level policies, guidelines, checklists and MIS have been developed and implemented for this purpose.

The corporate projects team of around 70 professionals is responsible for the design and development of new hospitals. A smaller team of this projects team is closely overseeing the Reach hospitals projects implementation.

Once the hospitals are operational, each hospital would operate rather independently, following the corporate guidelines and standard operational requirements. In addition, AHEL has been developing a corporate level reporting system for all its hospitals to capture the operational information including that related to E&S issues such as water, energy and waste management. As a condition of disbursement therefore, AHEL has agreed to submit the status of its corporate reporting system related to E&S issues (such as reporting procedure, formats and sample summary reports from the hospitals) to IFC. Further, AHEL will use this reporting system for the future submissions of Annual Monitoring Report to IFC.

AHEL will also report to IFC every 6 months about the status of new Reach hospitals opened during that period, together with the information about the compliance with applicable IFC PS in the prescribed format.

PS 2: Labor and Working Conditions

AHEL has a total workforce of around 20,000 across all its business lines, with 48% women employees across the ranks. AHEL has several formal and documented HR policies and practices in place, which are in line with the IFC’s PS2 requirements. These cover: terms of employment and working conditions including procedures for hiring, probation, training, performance review, promotion, insurance, salary and compensation, resignation, lay-off and firing, leave and vacation, and retirement, which are consistent with the national labor laws. Workforce safety and hygiene practices are in accordance with the stringent JCI requirements and thus comply with all the IFC PS and EHS guidelines.

AHEL respects the staff’s Freedom of Association, and thus staff unions are active in AHEL’s large hospitals. In addition, AHEL has established a formal grievance mechanism for its staff by way of People’s Forum. AHEL has implemented other innovative programs such as Apollo’s Passion for People (APPLE) which facilitates employee engagement activities and Every Contact Has an Opportunity (ECHO) – which supports Doctors’ retention programs.

AHEL being a service organization, places a great deal of emphasis on training and capacity development of its staff. A structured program for training and staff development is in place across all its business units and ranks, which also covers elements related of EHS. AHEL has nursing colleges attached to several of its hospitals, and has plans to develop such colleges for all its future Reach hospitals in due course.

In order to manage the turnkey construction of Reach hospitals, AHEL has developed Design and Build pre-requisites for the turnkey contractors, which spell out various requirements for the site operation and construction management. The aspects related construction labor and occupational health and safety are covered in Conditions of Contract for EPC / Turnkey Projects, which are primarily based on the FIDIC (International Federation of Consulting Engineers) format.

AHEL plans to work with some of the best and highly reputed construction companies in India who have articulated and formalized their own health and safety policies and management systems. Moreover, AHEL will appoint (at least) one of its own full time site engineer at each construction site throughout the construction phase to ensure quality and safety during construction.

PS3: Pollution Prevention and Abatement

AHEL has documented a compilation of all the statutory requirements related to EHS, to facilitate the regulatory compliance across all its facilities.

Water for all the Reach hospitals would be sourced from the local municipal sources. The water quality will be tested to ensure that it is potable, In case needed, pre-treatment shall be provided to ensure that the water meets the national as well as WHO standards.

AHEL will source the electricity for all the upcoming Reach hospitals from the grid. However, diesel generators would be provided as back-up in case of grid power cuts. The diesel storage would be provided with secondary containment to avoid the spills getting down the drain.

With regard to energy efficiency, all the Reach hospitals would be designed and built to comply with the requirements leading to LEED (Leadership in Energy Efficient Design) certification. AHEL plans to install solar water heating system supplemented by electrical boilers.

For its existing hospitals, adequate effluent treatment facilities are available on-site. The treated effluent is discharged to the municipal waste stream where it is further treated. For the upcoming Reach hospitals too, AHEL plans to install packaged sewage treatment plants on-site, for the pre-treatment of the effluent before discharging the sewage to the municipal treatment system. The treated effluent will thus comply with the World Bank Group guidelines.

AHEL has a formal and documented biomedical waste management mechanism in place which provides guidelines to ensure correct handling and disposal of solid and liquid waste and thus prevention of infection and contamination of personnel and equipment. A waste management committee, led by a senior management representative (such as GM Operations), is responsible for the implementation of this mechanism – which comprises of policies, guidelines and documented procedures. As a part of this waste management mechanism, AHEL has developed awareness materials (e.g. posters for waste segregation) and standard documentation (e.g. checklists for waste data collection and reporting). This mechanism would be implemented across all the Reach hospital in future.

For its existing hospitals, AHEL sends the biomedical waste to the authorized central biomedical waste treatment facilities as stipulated by local regulations. For the upcoming Reach hospitals too, AHEL plans to send the biomedical waste to the local authorized biomedical waste handling agency after treating. In case, such an agency is not available in some locations, AHEL will send the waste from such hospitals to the nearest location where such a facility is available.

PS4:– Community Health, Safety and Security

AHEL has demonstrated a strong life and fire safety performance in all its hospitals (19 owned, 8 JV/subsidiary) across India for the past 25+ years. During all these years, there have been no incidents/accidents resulting in fatalities or major injuries to the community.

For all the new Reach hospitals, AHEL develops an Architectural Brief, which spells out basic design requirements such as space and zoning requirements for strategic service lines (medical units, operation theatres, laboratories etc.), support services (engineering, patient services, etc.) and life and fire safety.

This brief requires the design for all Reach hospitals to be in compliance with latest recommendations and requirements of National Accreditation Board for Hospitals (NABH) National Accreditation Board for Laboratories (NABL), National Building Code (NBC); and spells out basic design principles such as use of natural light; safety and security of patients and hospital resources and compliance with Green Building certification requirements etc. The architectural design for all the Reach hospitals would be done by a panel of architects, all of whom are familiar with all the Apollo’s own as well as Green Building requirements.

AHEL follows the JCI standards for life and fire safety for its major hospitals, which are considered to be best practices internationally. The visits to its existing hospitals revealed an excellent fire safety system in place.

For all the Reach hospitals covered under the Project, AHEL will submit to IFC certification from a suitably qualified professional that each of the Reach hospitals are designed, constructed, and operated in full compliance with local building codes, local fire department regulations, local legal/insurance requirements (such as NBC, NABH & NABL).

In addition, as a condition of signing, AHEL will engage suitably qualified professional(s) acceptable to IFC, to prepare a comparison of the Indian life and fire safety requirements with selected international life and fire safety code(s). AHEL shall accordingly provide to IFC the results of this study and subsequently a certification from the competent professional that the design of Reach hospitals is in material compliance with internationally accepted life and fire safety standard(s).

AHEL employs security personnel, who do not carry firearms. In addition to protecting the hospital property and AHEL assets, the security guards perform important support functions such as regulating vehicular movement control and facilitating patients and visitors to the hospitals.

On the basis of the above information, and by implementing the Environmental and Social Action Plan the Project will be operated in compliance with IFC’s PS and relevant environmental, health and safety guidelines.

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