UFH 2

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	26133
Country	China
Sector	Health Care
Department	Health and Education
Company name	Chindex International Inc.
Environmental category	B
Status	Active

Date ESRS disclosed	July 18, 2007

Previous Events	Invested: January 10, 2008 Signed: December 10, 2007 Approved: November 19, 2007

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 review of this project consisted of appraising technical, environmental and social information submitted by United Family Hospital (UFH, or the Sponsor) and reviewed by IFC as part of IFC’s ongoing investment project with UFH, as well interviews and correspondence with company representatives. A site visit has been conducted of UFH’s existing facilities in Beijing, China.

IFC and UFH have agreed to a set of actions to ensure the company’s compliance with IFC’s Performance Standards and Environmental, Health and Safety Guidelines throughout the planning, construction and operation of the new project.

Project description

United Family Hospitals and Clinics (UFH), an existing IFC client, plans to construct and operate two new hospitals targeting the local Chinese population in Guangzhou and Beijing. Each of the new hospitals will be between 100 and 150 beds, compared to 50 beds at each of UFH’s existing hospitals. Fees at these new hospitals are expected to be lower than at UFH’s existing facilities, which primarily serve the foreign expatriate population and wealthy Chinese. In addition to the two new hospitals, the Project will include two satellite clinics, an upgrade of the group’s IT infrastructure, and service expansion at its existing facilities.

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 and Safety;
- PS 5 – Land Acquisition and Involuntary Resettlement; and
- IFC’s Policy on Disclosure of Information.

The following Guidelines are applicable to this project:

- IFC’s General Environmental, Health and Safety Guidelines, dated April 30, 2007; and
- IFC’s Environmental, Health and Safety Guidelines for Health Care Facilities, dated April 30, 2007; and

This ESRS assesses the project against the above Performance Standards and Guidelines. The project was not assessed against PS 6 Biodiversity Conservation and Sustainable Natural Resource Management, PS 7 on Indigenous People or PS 8 on Cultural Heritage as the project does not involve the harvesting of natural resources or impacts on natural habitat, and it does not impact on either Indigenous Peoples or known Cultural Heritage.

Environmental and social categorization and rationale

This is a Category B project under IFC’s Environmental and Social Review 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, design criteria, local regulations and industry certification schemes. Environmental, social, health and safety issues which may be associated with this type of project, and which were reviewed during appraisal, included: site selection and land acquisition; management systems for environmental, health and safety (EHS), communicable diseases and potential outbreaks, and life and fire safety issues; compliance with local and IFC requirements for air emissions, wastewater treatment and disposal, solid waste management and transportation, including medical and bio-hazardous waste; emergency preparedness and response; indoor air quality; noise; energy, water, refrigerants and other material use and efficiency; labor and workplace conditions; and community engagement.

Key environmental and social issues and mitigation

Social and Environmental Assessment and Management Systems

- Environmental and Social Assessment

In the establishment of its existing and planned facilities, UFH conducts environmental and social assessments in compliance with Chinese requirements and PS 1. For the economic or physical displacement that is expected to occur as part of site development, UFH has committed to address the consultation and disclosure requirements of PS 1, as well as the land acquisition and involuntary resettlement requirements of PS 5.

The company has retained a project management firm to develop a template for the design, construction and operation of its healthcare facilities. The template will consolidate the company’s existing practices and expectations into a common framework for use in current and future expansion facilities. It will specify UFH’s building and operational standards including but not limited to: sustainable materials in the construction process; design requirements for fire safety, disease prevention and isolation; clean fuels for on-site electricity generation; energy-efficient plant and systems; and segregation of medical and other wastes.

- Management Program and Organization

UFH facilities adopt management systems and implementation capacity in line with international best practice. The Beijing facilities are certified to standards developed by the Joint Commission International Accreditation (JCIA), a division of the Joint Commission on Accreditation of Healthcare Organizations (JCAHO) that is the largest accrediting body for healthcare organizations in the United States of America (USA). JCIA is an authoritative organization specializing in accrediting hospitals that are outside the USA. The JCIA Standards for medical quality and service quality are the highest standards presently achievable for a hospital and this is recognized internationally by the industry and the World Health Organization (WHO). In compliance with the standard, UFH develops policies, systems and procedures to manage environmental, health and safety and social issues and generally for hospital management. These areas are addressed under the following standards of JCIA: patient care; safety; rights and education; prevention and control of infection; facility management and safety; staff qualifications and education; governance and leadership; and management of information. JCIA certification is renewed every three years and UFH rigorously checks and reviews the ongoing implementation its system. UFH is planning for its Shanghai facilities to also be certified to JCIA in 2008 and this will be implemented within all new expansion facilities, with the goal of certification within the first year of their operation.

As part of the JCIA management system, all UFH facilities assign responsibility for EHS, fire safety, disease prevention and outbreak control to responsible staff.

- Training

UFH employs a full-time training department that provides induction and on-going training for medical and non-medical staff. Training includes but is not limited to: service excellence; infection control; risk management; patient rights; English and Chinese language training; and life support. Supervisors conduct regular meetings with staff to discuss and review performance. Extensive training is provided to all of UFH’s nurses, who are locally-hired, to ensure they meet international JCIA standards. 80% of the company’s nurses also have overseas experience. UFH is the only facility to provide midwifery training and services in China. It also provides first aid and basic life support training to external companies and CPR training is provided to patients.

- Community Engagement

The company’s initiatives are described in the section “Community Engagement” below.

- Monitoring and Reporting

UFH’s facilities are required to conduct regular monitoring of air emissions, wastewater discharges and the disposal of medical and other wastes. Results are reported to management and local environmental authorities who also conduct their own inspection of UFH’s electricity, sewage and water, fire protection and lighting systems, elevators, boilers, pressure containers and measuring devices.

Internal monitoring of performance is also conducted regularly in line with JCIA requirements. Staff are encouraged to submit occurrence reports anytime there is a nonconformance with required procedures or an incident. The occurrence reports are reviewed at regular meetings of the Risk Management Committee and corrective actions are identified and implemented as needed. The Committee reviews trends over time and improves procedures and training as needed. Departmental meetings and both internal and external Peer Reviews are conducted to assess performance and identify areas for improvement. Each department has quality indicators based on the 20 performance areas designated by JCIA.

As UFH is listed in the United States, it is preparing for an audit of its operations to ensure compliance with Sarbanes Oxley requirements. As a result, it has developed a new code of conduct that includes anonymous whistle blower protection.

Labor and Working Conditions

- Human Resource Policy and Management

The UFH has a comprehensive human resources (HR) policy and documented procedures for managing HR issues, ranging from working hours, to maternity and paternity leave, to training and staff development. The company’s HR policies, management system, conditions of employment and working conditions are in compliance with national law and PS2. A biannual survey of staff is conducted to assess satisfaction levels and identify areas for improvement. Staff engage in a commitment setting process and performance review every year, which informs the provision of staff bonuses. The company’s internal grievance mechanism encourages staff to raise issues through direct discussions with immediate supervisors or managers and by e-mail directly to management.

- Worker’s Organizations

As in its existing facilities, the project will establish a staff union in compliance with local Chinese and IFC requirements. In accordance with current legal requirements, the Beijing United Family Hospital (BJU) is registered with the Chaoyang Health Bureau Labor Union. BJU has five appointed “members”, including three from HR, one legal representative and the fifth is a study member of the organization.� Meetings are held throughout the year, and UFH pays a Union Fee of 2% of the salaries of all Chinese-national employees.� BJU has also set up a mandatory separate bank account to hold funds to be used specifically for “employee recreation” purposes. With the new Contract Law imminent, the requirement to formalize a Trade Union will become more critical and this is on UFH’s HR agenda to address.� Shanghai United Family Hospital is currently in initial stages of developing necessary relationships to set up a similar arrangement. UFH will establish unions as required by local law in its expansion facilities.

- Non-discrimination and Equal Opportunity

UFH’s policies and procedures outline the Company’s human resource policy, commitment to non-discrimination and equal opportunity.

- Retrenchment

UFH will be hiring new employees, primarily local physicians and staff, for its expansion facilities. Staff turnover is low at 2% overall and less than 1% for doctors at its existing facilities.

- Protecting the Work Force

The company does not engage children or forced labor and it complies with local labor laws and related PS2 requirements to protect the workforce. All employees are over the age of 21, which is above the minimum required age of 18. The minimum wage is RMB750 per month plus benefits, depending on staff position, experience and tenure. All overtime must be pre-approved except in emergency cases. Management is not entitled to overtime pay and physicians receive compensation leave in lieu of overtime pay. Nursing and non-managerial administrative staff receive 1.5 times regular pay for any approved overtime worked. Nursing staff may not work more than 16 hours in one, 24-hour period. Staff receive compensation above the minimum wage and commensurate with their job responsibilities and experience. UFH has a zero accident and fatality rate for its operations.

- Occupational Health and Safety

UFH’s JCIA-compliant management system includes policies and procedures for managing occupational health and safety issues within its facilities. A number of initiatives are undertaken by UFH to safeguard the health of employees and patients. Examples include: an Infection Control Plan to prevent, identify and control healthcare associated infections; education of all employees on the importance of “standard precautions” in the hospital to reduce the risk of work-related exposures (e.g. hand hygiene, personal protective equipment, handling sharps, emergency eye washers and showers, appropriate cleaning procedures); provision of an employee health program that screens new employees to prevent, monitor, investigate potentially harmful infectious exposures and outbreaks among personnel and provides care for personnel for work-related illnesses or exposures; and implementation of a policy to manage healthcare workers exposed to blood and body fluids.

Pollution Prevention and Abatement

Pollution Prevention, Resource Conservation and Energy Efficiency

As noted above, UFH is developing a template to be used for the design, construction and operation of all of its new healthcare facilities. The template will be a Master Facility Plan, consolidating the company’s existing operational practices, standards and expectations into a common framework, including but not limited to: sustainable materials in the construction process; design requirements for fire safety, disease prevention and isolation; clean fuels for on-site electricity generation; energy-efficient plant and systems; and segregation of medical and other wastes.

For the company’s existing facilities, electricity is provided from the grid and generated on-site from natural gas whenever available. Energy-efficient systems and equipment are incorporated into the initial design of all of its facilities and used in ongoing operations. Air emissions are compliant with local and IFC requirements at UFH’s existing facilities.

Bottled water is used for drinking or medical purposes. Water used for the operation of the boilers and facility cleaning is sourced from the municipal water supply and treated by ultra filtration and deionization water systems. Wastewater discharges are pre-treated with chlorine disinfectant prior to their discharge to municipally-operated sewage and water treatment plants. Wastewater discharges are compliant with local and IFC requirements at UFH’s existing facilities.

- Waste and Hazardous Materials

Clinical and hazardous wastes are collected in specially identified containers within UFH’s premises and removed multiple times daily by the housekeeping staff and placed inside bins in a locked temporary storage area. Housekeeping staff wear appropriate protective equipment and follow UFH’s infection control policy when disposing of clinical waste. The management of hazardous, clinical and radioactive wastes are controlled through UFH’s JCI-compliant management system. All wastes, including solid waste, are removed daily from the storage area by a government-approved contractor. The contractor is responsible for the offsite incineration of all clinical and hazardous waste. Radioactive wastes, comprising waste film developing solution, are appropriately stored for collection and disposal by an authorized contractor. UFH investigates the final disposal points for its wastes to ensure the proper disposal of all materials. No incineration is conducted on-site.

- Emergency Preparedness and Response

As part of its accredited JCIA system, policies and procedures are in place to specifically address life and fire safety issues in compliance with IFC guidelines. Mandatory fire safety training is provided for all new and existing hospital employees and drills are carried out regularly in accordance with the plan. UFH has duty engineers available on-site 24 hours per day who are in charge of monitoring fire safety equipment. UFH’s operations and facilities are in compliance with all local fire safety laws and regulations and the local government monitors compliance annually.

Stringent disease prevention measures are in place, ranging from proper sanitation, use of PPE and equipment sterilization to the regular testing of air cultures, and the provision of negative pressure rooms for ICU patients, as well as facilities and systems to manage infectious diseases.

UFH operates a color-coded system to respond to emergencies in all of its facilities and staff are regularly trained on emergency and fire response procedures. The system covers a red alert for fire, yellow for violent patients, green for general security and pink for child abductions (security staff guard entrances to maternity/pediatric units and staff must enter specified codes to enter these rooms).

- Green House Gas Emissions

UFH’s operations do not generate GHGs in excess of 100,000 tons of CO2 annually.

- Pesticide Use and Management

The company does not use or manage pesticides.

Community Health, Safety and Security

- Community Health and Safety

UFH has both facilities and management procedures to prevent and manage patients with infectious diseases and to handle outbreaks that have the potential to impact on community health and safety. Temperature checks of patients are routine and patients with fevers are isolated in negative pressure rooms. At the entry to each of its hospital facilities, a separate building is established to register and check patients for fever. UFH has procedures, equipment and isolation facilities/systems, and has provided training to staff, to respond to potential emergencies that could result in potential internal or external impacts.

- Emergency Preparedness and Response

An emergency preparedness and response plan covers potential incidents associated with UFH’s operations. A monitoring and reporting system is in place to engage local government as needed in the event of an emergency and arrangements exist to engage assistance from the public fire brigade and the local heath and environmental authorities as needed.

- Security Personnel Requirements

Professionally managed and trained security personnel are hired to guard UFH’s facilities 24 hours a day, 7 days a week. Contracts include requirements to meet national laws and to provide appropriate training. Guards implement a visitor registration system and, as noted above, security staff guard entrances to maternity/pediatric units to ensure the safety of patients.

Land Acquisition and Involuntary Resettlement

UFH’s existing facilities are located in leased premises, either in existing buildings or on land that did not involve the physical or economic displacement of local business or communities. While the company has yet to confirm the final locations for its expansion facilities in the urban centers of Beijing and Guangzhou, sites under consideration are either in existing buildings or on land that is either occupied by or rented to a few households by the owners of the use rights for the land. For the proposed location in Beijing, the land developer has confirmed that compensation levels are set by the local government in accordance with local law and in consultation with affected parties. UFH will ensure that the acquisition of land and the compensation of affected parties are conducted in accordance with local law and the requirements of PS5.

IFC PROJECTS