Healthway

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

28975

Country

China

(IDA)

Region

Asia and the Pacific

Sector

Hospitals and Clinics

Department

Reg Manufact, Agri & Services, ASIA

Company name

Healthway Medical Corporation Limited

Environmental category

Status

Active

Date ESRS disclosed	January 22, 2010
Last Updated Date	February 8, 2012
Previous Events	Invested: May 4, 2010 Signed: March 15, 2010 Approved: March 8, 2010

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

The scope of review of Healthway Medical Corporation Ltd.’s (the “Company” or “Healthway”) China operations included assessment of the Company’s capacity to provide oversight and monitor compliance with IFC’s Performance Standards as well as national environmental, social and occupational health and safety regulatory requirements in the People’s Republic of China. The review relied on documents and reports made available by Healthway and interviews conducted by IFC staff during their site visits to Healthway’s existing facilities in Shanghai, China – Jinqiao International Medical Center (Jinqiao – an outpatient community health center) and Nobel Eye, Nasal, and Throat Hospital (Nobel – an outpatient facility). IFC also visited the site of a proposed outpatient and health check-up facility in Shanghai which was under-construction.

IFC met with Healthway’s senior management team from Singapore including the Managing Director of Medical Services, as well as its Consultant of Medical Affairs, China. A detailed discussion with the Consultant of medical affairs on environmental and social aspects of the current operation was conducted. The scope of the review is limited to Healthway’s China operations.

Project description

Healthway is a company listed on the Singapore Stock Exchange that has about ninety clinics and medical centers in Singapore providing high-quality, affordable medical services through community medical centers and hospitals. Healthway entered the China market in 2007 and aims to establish an integrated network of primary, secondary and tertiary health care facilities primarily located around Shanghai and elsewhere in China. The medical centers will mainly consist of community medium-size outpatient clinics providing secondary care to patients. The Company currently has two facilities in Shanghai.

IFC has been approached to provide financing of up to $25 million to support Healthway’s expansion in China.

Identified applicable performance standards

While all Performance Standards are applicable to this investment, IFC’s environmental and social due diligence indicates that the investment will have impacts which must be managed in a manner consistent with the following Performance Standards:

PS 1: Social and Environmental Assessment and Management Systems;
PS 2: Labor and Working Conditions;
PS 3: Pollution Prevention and Abatement;
PS 4: Community Health, Safety and Security; and
PS 5: Land Acquisition and Involuntary Resettlement.

Issues associated with the following PS were also assessed but were found to be non-applicable to the project: PS6: No adverse impacts to biodiversity or sustainable natural resource management were found; PS7: No Indigenous People are known to have been in the area or affected by the project; PS8: No evidence of the presence or impact on issues associated with Cultural Heritage was identified.

Since this investment may be used to support other facilities, which are yet to be identified, the Company shall consider all relevant social and environmental risks and impacts, including the issues identified in PS1 through PS8 while assessing any new business opportunities, service models, or new sites. In particular, if the Company plans to develop new facility sites involving land acquisition or involuntary resettlement of local communities, it will commit to ensuring fulfillment of PS5 requirements.

Environmental and social categorization and rationale

This is a Category B project according to IFC’s Procedure for Environmental and Social Review of Projects because a limited number of specific and reversible 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 that were reviewed included the following: environmental and social management system; emissions to the environment – air, water and subsurface; solid, hazardous, biomedical and infectious medical waste and materials management, storage, collection and disposal; life and fire safety and emergency preparedness and response program; community and occupational health and safety; energy use and efficiency; and community engagement.

Key environmental and social issues and mitigation

PS1: Social and Environmental Assessment and Management Systems

Healthway has a corporate operational manual detailing its environmental and social management processes and procedures. The Singapore parent company conforms to the Singapore Ministry of Health’s requirements on the operation of medical facilities. The Company has appointed personnel to oversee E&S operational aspects including indoor environmental quality (lighting, ergonomics, air quality, acoustic and thermal comfort, and personnel safety), resource conservation, waste management, healthcare risk management, occupational health and safety, labor and working conditions, energy/water usage efficiency, and social engagement. The operational manual is tailored to meet specific site conditions at each facility. Operational policies and procedures are developed to ensure compliance with applicable national and local regulations.

An Environmental Impact Assessment (EIA) was conducted for Nobel in June 2005 and was approved by the local Environmental Protection Bureau (EPB) in July 2005. Environmental completion inspection approval for Nobel was granted by the local EPB on March 6, 2006. Relevant EIA documentation has been prepared for the Jinqiao facility and was submitted to the local EPB in 2009. Healthway will provide the full report and the Government approval of the EIA for IFC’s review.

Reporting to the Managing Director for Medical Services, the corporate medical director (also facility medical director at the Nobel Eye, Nasal, and Throat Hospital) is responsible for overseeing the E&S performance of the Company’s operations in China. Each facility has a medical director responsible for E&S management at the facility level, reporting to the corporate medical director. Human resource issues such as salaries and benefits, employee performance evaluation, and employee communications are managed through the corporate human resource department.

At each Healthway facility, designated personnel have been assigned to manage environmental aspects of operations - for example, handling sharps, infectious medical wastes, and the on-site wastewater treatment facility (WWTF). When developing new facilities, Healthway takes environmental and social issues into consideration during site selection (for instance – potential impacts of medical wastes on neighboring communities and the design of on-site wastewater treatment facility). The Company outsources the disposal and handling of medical wastes, solid wastes and waste developing agents (arising from X-ray rooms – and classified as hazardous waste) to Government-licensed third-party operators. Details of waste disposal are provided in the section on PS3.

IFC concludes that the Company has various elements of an Environmental and Social Management System (ESMS) which it will refine to ensure effective management of E&S risks of existing and future potential facilities. As part of the Environmental and Social Action Plan, Healthway will implement a corporate ESMS to provide consistent oversight of environmental, social and health and safety aspects for all operations and also in relation to its sub-contractors. The Company will also designate an individual on its China Subsidiary Company’s Board of Directors to implement effective risk screening when setting up new facilities, and to ensure compliance of existing and new facilities with national regulatory requirements and IFC Performance Standard requirements.

PS2: Labor and Working Conditions

Healthway currently has about 60 employees in China including doctors, nurses, and cleaners, who are all directly hired employees on a contract or permanent basis. Medical insurance and work-related accident insurance are provided for out-of-province employees. In addition, maternity and unemployment insurance are provided for local Shanghai employees. Approximately one third of the nurses working at the Nobel Eye, Nasal, and Throat Hospital are non-locals. Housing or housing subsidy is provided for these employees.

The Company has a human resource policy and its practices are consistent with China’s labor laws (e.g. making social insurance contributions on behalf of staff). The Company regularly trains staff to ensure they are operationally competent and follow safety requirements. There is no worker union in place within Healthway in China. There is evidence of robust grievance mechanisms in place at Healthway – the Company communicates with its employees regularly and provides opportunities (i.e. through one-on-one meetings and group discussions) for its employees to voice concerns. Visual inspections by IFC confirm working conditions to be reasonable at Healthway facilities, and IFC finds no signs of the use of child labor or forced labor practices. The company has had no occupational incidents at its facilities during the past year. The company has established a committee at its facilities to oversee and minimize pathogenic cross-contamination among staff, and has a manual on the management of cross-contamination during surgical operations.

No turn-over at senior management level was recorded during the last three years. At operational levels, the annual turnover rate for nurses is estimated at below 10%. The Company stated there have been no complaints from employees thus far, and at staff meetings topics such as how to improve working conditions are discussed. There have been a few cases of staff being let go due to unsatisfactory performance, in which case one month’s salary was paid after completion of existing employment contracts to allow said staff time to look for work elsewhere. Hiring and employment practices recognize the principles of non-discrimination and equal opportunity, freedom of association and grievance.

Cash compensation or time-in-lieu is provided for overtime work performed, as per national labor contract law requirements. The existing medical facilities operate during day-time only and employees work 40 hours a week, requiring limited amount of overtime. There have not been cases where overtime exceeded 10 hours per month.

Radioactivity monitoring meters are provided for workers operating X-ray machines at Jinqiao and Nobel. Readings are taken on a monthly basis by the local authorities to ensure compliance with national limits. Monitoring of radioactive levels at work areas in and around the X-ray machines is conducted, and the Company has a set of operational procedures dictating its radioactive department operations. IFC reviewed the 2009 monitoring reports and results were in compliance with national limits. Workers are required to take both pre-commencement medical check-ups and annual check-ups thereafter.

Healthway provides personal protective equipment (PPE) that includes surgical caps, clinical masks, and clinical gloves to its employees for prevention of biological and pathogenic hazards. Activities that require PPE include, but are not limited to injection, surgery, handling of medical waste, and operation of wastewater treatment.

PS3: Pollution Prevention and Abatement

Wastewater from all sources within the facility (except sanitary wastewater which goes directly into the municipal sewage system) is pretreated by an on-site waste water treatment facility (WWTF) at Jinqiao and Nobel before being drained to the municipal sewage and eventually to the municipal WWTF for secondary processing. Jinqiao’s WWTF was designed and installed by a licensed vendor, and and stormwater is separately collected and discharged to the municipal stormwater system. Results from an annual wastewater discharge monitoring report indicated compliance with local discharge limits and IFC guideline standards. Sludge arising from sources such as patients’ body fluids enters the WWTF and is collected and disposed of by a municipal sanitary waste collector. As part of the Environmental and Social Action Plan, The Company will contract with a licensed vendor for hazardous waste disposal and treat the sludge as hazardous waste.

At Nobel, an underground adjustment tank is used to collect wastewater from the facility. The wastewater then gets pumped to a ground-level reaction tank to which a staff member manually applies sodium hypochlorite to treat the wastewater. Whilst the tanks are sealed, there is potential for rainwater inadvertently carrying the waste into the ambient environment. Healthway recognizes that the WWTF and treatment practice at Nobel is not currently compliant with national and IFC requirements, and is committed to making necessary upgrades including a proper stormwater management system.

A ventilation system has been installed throughout Jinqiao, while a ventilation system for Nobel is installed in the surgical operation room. IFC’s observation is that the Nobel facility is well ventilated with good air flow throughout the building. Split-type air conditioners are used at Jinqiao and Nobel for indoor temperature control.

Medical wastes generated from Jinqiao and Nobel consists of sharps and infectious medical wastes. Medical wastes, photosensitive wastes and sanitary wastes are segregated and handled separately. As per national requirements, sharps are collected in yellow plastic containers at each location that generates the wastes, while infectious medical wastes are collected in plastic containers with yellow plastic bags at the generated locations. The Company has a set of operational procedures governing its medical waste collection practice. A centralized area is set up in a storage room at Jinqiao for temporary medical waste storage. IFC noted that the storage area did not have standardized warning signage for medical waste storage and was not locked for access control, and some cleaning utensils and personal effects were found behind the door in the same room. A centralized medical waste temporary storage area was set up in a small room next to the ladies washrooms at Nobel. Standardized warning signs are posted at the storage area and the area is locked for access control. Medical wastes generated from the facilities are collected and disposed of weekly by a Government-licensed contractor, Shanghai Kanghuan Solid Waste Co., Ltd which is licensed by the Government to handle hazardous wastes. IFC staff reviewed a manifest of medical waste transfer dated December 2009.

Blood pressure gauges used at Healthway facilities involve the use of mercury. They are calibrated annually and those not meeting calibration requirements are collected and re-calibrated by the local authorities. Waste developing agent, which is classified as hazardous waste in China, is generated during the X-ray film developing process at Jinqiao and Nobel. The Company signed a contract for collection and disposal of waste developing agent with a Government-licensed company, Shanghai Zhenyuan Waste Treatment Co. Ltd. The contract is effective until October 2009. A new contract has been signed with a third-party clinic for collection and disposal of waste developing agent, in effect until March 2010. As part of the Environmental and Social Action Plan, Healthway will renew the contract for waste developing agent disposal with a Government-licensed company before expiration of the current contract in March 2010, and obtain and keep records of hazardous waste manifests.

IFC concludes that overall the Company has adequate medical and hazardous waste management systems and procedures (e.g. audit trails in the form of audited HAZMAT transfer lists) in place to ensure compliance with national and IFC EHS guideline requirements.

Water and electricity at Healthway facilities are supplied by the municipal water supply company and the national grid respectively. Total annual energy and water consumption at Healthway facilities are about 100,560 kWh and 688 cubic meters respectively. Net greenhouse gas (GHG) emissions attributable to consumption of grid electricity and the use of air conditioners are estimated to be 1,459 metric tons carbon dioxide equivalent per year.

PS4: Community Health, Safety and Security

Healthway facilities are located in mixed-use (commercial and residential) neighborhoods. The Company follows stringent local regulations in relation to the transport and storage of chemicals, gases and hazardous wastes, to minimize the possibility of impact on local communities. No major renovations of existing facilities are expected over the next few years.

Healthway has established life and fire safety (L&FS) provisions at its facilities. Fire-fighting equipment, including smoke detectors, sprinklers, and fire hydrants were in place at Jinqiao, and the same was also present at Nobel. Emergency lighting and exit signs were found at both Jinqiao and Nobel, as well fire exits with proper signage. An emergency plan and reporting system on medical incidents has been established at Jinqiao and Nobel. The Company submitted an application for approval of Jinqiao’s fire safety compliance to the local fire safety authority which subsequently approved the application in May 2009. Nobel obtained fire safety approval in 2005.

The Company will ensure that all facilities possess required local fire safety approval if they do not already have it. The Company is also committed to ensuring that for any new facilities to be developed, it will retain a certified L&FS auditor to develop a master plan acceptable to IFC. A post-construction L&FS compliance audit will then be conducted by qualified personnel to verify that facility design and construction meet IFC’s L&FS requirements and compliance with an internationally accepted life and fire safety standard – e.g. The Life Safety Code (U.S. NFPA).

Results of a 2009 test report from the Shanghai Pudong Center for Disease Control indicates compliance with national requirements on pathogenic germ count limits. Healthway will reinforce its emergency response plan to prepare itself for large scale emergency situations such as fires, and scenarios in which disease, pathogens and other bio hazards might be released under normal and emergency scenarios. The emergency plan will be revised based on the results from a risk assessment and analysis to identify all potential hazard points at the Company’s facilities.

PS5: Land Acquisition and Involuntary Resettlement

Current or proposed facilities occupy rented space in existing commercial buildings in mainly urban settings. As part of its business expansion in China, Healthway will be setting up new facilities, including one in the outskirts of Shanghai. The potential facility will involve leasing or acquiring an existing facility which has been in place for some years. If any of the future new facility sites were to involve land acquisition or involuntary resettlement of local communities, including government-led acquisition which occurred in the past few years, the Company will ensure ex-post fulfillment of PS5 requirements.

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