Medicina

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	11473
Country	Russian Federation
Sector	Health Care
Department	Health and Education
Company name	Medicina Joint Stock Company
Environmental category	B
Status	Active

Date ESRS disclosed	November 20, 2007

Previous Events	Invested: April 24, 2008 Signed: February 21, 2008 Approved: January 10, 2008

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, health, safety and social information submitted by the project sponsor, and a site visit in October 2007. The environmental and social (E&S) appraisal team visited the company’s existing hospital operation in Moscow, the adjacent proposed expansion site, and met with project management staff.

Project description

OJSC Medicina (Medicina or the company) is one of the leading multifunctional private clinics in Moscow, Russia. In 2006 the company treated 1.2 million patients and recorded revenues of $40.5million. The company employs a total of 770 employees, of which over 200 are doctors, and provides a comprehensive set of clinical services, including therapy, surgery, ambulatory, in and out patient care, diagnostics, hospitalization, dentistry and modern cosmetology to corporate and individual clients in an existing 42 bed facility. In 2006, Medicina acquired the rights to a land plot directly adjacent to the current facility from the City of Moscow, in order to build a second hospital wing.

The proposed project is an expansion of Medicina’s existing operations and includes:

- construction of a new 80-100 bed hospital building, clinic and
- expansion of the ambulatory care facilities.

The estimated total project cost will be up to RUB2.5billion ($96.7 million equivalent). Medicina intends to finance it with a combination of corporate debt and equity.

Key environmental and social issues and mitigation

Environmental and Social Management and Organization:
Medicina is ISO 9001:2000 certified and is currently working on improving the existing system, in accordance with the EFQM (the European Foundation for Quality Management) Model. In addition, the sponsor is a member of the Swiss Leading Hospitals Association which they had completed over the past 18 months. The purpose of the Swiss Leading Hospitals Association is to ensure the highest level of patients' satisfaction, highest quality and level of medical assistance exceeding average levels. Medicina is very proud of this achievement, as they were the first facility outside of Switzerland to receive this distinction for service. Medicina will incorporate into their existing quality management system the necessary environmental and social dimensions, in order to be compliant with PS1, as per the attached Environmental and Social Action Plan (ESAP).

Labor and Working Conditions:

Human Resources (HR) Policy and Management: Currently Medicina employs a staff of 770 with 25% estimated increase in directly contracted employees once the expansion project is completed. In the framework of Quality Management System, the company has adopted an internal Standard on Human Resources Management. The Standard is consistent with Labour Code of Russian Federation and includes the written terms of employment and termination, disciplinary practices, personnel training and development, conflicts resolution and staff satisfaction assessment. Each employee is familiarized with these documents before signing the individual contract.

All employees have to undergo a full training program at induction (including company’s internal and client-oriented standards, rules and policies; fire and life safety) and subsequently on health and safety relevant to their job activity. Professional staff is also provided with opportunities for continuing professional development via certified external, corporate or individual training. The procedure of identification of training needs for employees and development of a training plan to address those needs is provided in the HR Policy.

Workplace concerns and suggestions can be brought to management’s attention through HR department and/or “suggestion” box to protect the confidentiality of the worker.

Worker’s Organization:

Although Medicina’s staff have not chosen to join a trade union or bargain collectively, they have such a right under the Labor Code and the Federal law �About Trade Unions, Their Rights and Guaranties of their Activity�. Medicina will not discourage employees from forming or joining trade unions or bargaining collectively in the future. Company’s management is conducting annual meetings with staff to address issues relating to their working conditions and terms of employment.

Non-Discrimination and Equal Opportunity:

Hiring is conducted in accordance with the Russian Labor Code and there is a strict policy against discrimination based on gender, race, age or nationality.

Protecting the Work Force:

Protection of the work force in Russia is provided through legislation, in particular the Labor Code. The Labor Code was updated in 2006 to provide extensive protection for workers and ensure that a large array of social benefits must be provided by the company. The Client will ensure through the agreed Environmental and Social Action Plan that direct contracts with construction companies, including their subcontractors (all on-site workers), to be used for the expansion project, include labor and employment requirements consistent with PS2. This includes the following: documentation and communication of working relationship (i.e. working conditions, terms of employment, entitlements to wages and benefits) in compliance, at a minimum with national law; recognition of workers organizations and collective bargaining rights in compliance with national law; non discrimination and equal opportunity; provision of a grievance mechanism, no child and forced labour (an awareness of migrant labour if used and associated working conditions); and in particular occupational health and safety of the construction workforce and safety of the community related to construction activities in the neighbourhood. Medicina should monitor or will hire a third party to provide such monitoring, and report any construction accident statistics to IFC.

Occupational Health and Safety (OHS):

The company employs in-house OHS engineer. In accordance with Russian regulatory requirements, the company has hired licensed company to carry out job safety analysis for each workstation. Based on the results of this analysis, the Action Plan aimed at OHS hazards minimization and control is developed, including use of appropriate PPE in conjunction with training. In 2006 the company had 1 lost time accident (LTA). Medicina will provide further efforts to instill a safety culture and minimize health and safety incidents to a rate of zero.

Pollution Prevention and Abatement:

Medicina facilities will generate solid wastes and liquid effluents.

Liquid effluents:

These are currently discharged to the municipal sewers under permit and there is a disinfection of biological effluents prior to disposal. Development of the new facility will utilise similar approaches to waste water effluents and the project will comply with IFC requirements.

Solid Waste Management:

The company’s procedure on solid waste handling is developed based on the requirements of Russian sanitary regulation 2.1.7.728-99. Solid wastes generated as the result of Medicina’s activity is categorised into 3 classes. Class A – non-hazardous solid wastes - are collected separately from medical wastes and removed by the licensed company for further disposal at landfill site. Class B – non-hazardous medical wastes - are collected separately for further disinfection. The company has a separate valid contract with the company “Ekoservice” authorised for the removal of disinfected medical wastes and its final treatment. There is also a special procedure for the collection and storage of Class G - mercury/bactericidal lamps and other hazardous non-medical wastes. These types of waste are removed and utilized by companies licensed to handle industrial wastes. Medicina does not generate highly hazardous wastes containing toxic or infections materials (Class C).

Community Health, Safety and Security

Principal risks to community health and safety will relate to fire and life safety risks for patients and visitors to the company’s facilities. There appears to be an acceptable level of L&FS control and management at the existing hospital: Smoke detectors, alarms, fire hoses and extinguishers are present throughout the facility and automatic sprinkler systems are present on the top three floors owned by Medicina, as well as in the basement of the building. Electricity supply for all fire protection systems is taken from the city network. In case of electrical supply failure, the system is automatically redirected to the back-up source of energy provided by the city. Firewater supply to feed the sprinkler systems and hose reels rely on the city public network.

The company employs in-house L&FS engineer and runs service contracts with external companies on maintenance of the alarm and sprinkler systems. All employees have to undergo a full training program at induction on L&FS issues and periodic evacuation drills are being carried out for the personnel of the clinic.

The company has committed to complete the required Master Plan for the whole facility and will assess the existing facility and address corrective action if necessary, once the new facility is constructed and operational, as per IFC’s L&FS guidelines as per the attached ESAP.

In conclusion, there are no other significant community health risks associated with this investment.

Resettlement and Compensation

There is a need for relocation of existing private owners (37) and municipal tenants (24) in the three buildings adjacent to Medicina’s existing facility, which they will demolish and incorporate into the expansion project. The numbers have not been completely finalised and some more people may have privatised their apartments from municipally owned units. There is primarily physical relocation of residential units, with a few small businesses/office units. Medicina will negotiate on a willing buyer willing seller basis with the private owners, both residents and the one private business. There is apparently no threat of expropriation. However, the company could resort to the courts if it felt it was necessary. The Municipal tenants are being relocated to new housing by the City of Moscow. It appears that the local laws and regulations (primarily Housing Code of RF and Moscow City Law No. 67 of 26.12.2006 on Ensuring Housing Rights of Individuals in Cases of Relocations and Vacation of Dwelling Premises (residential buildings) in the City of Moscow, as well as two specific Orders dated July 4, 2005 and July 16, 2007) are reasonably comprehensive and sensitive to the needs of those being impacted. They allow for various relocation options for municipal tenants and adequate timing for the relocation prior to demolition (impacted people should be informed not less than 1 year ahead of the planned resettlement). Demolition is proposed for last quarter of 2008. At the moment a Moscow firm “Moskompereselenie” has been hired to appraise the market value of the properties, and to begin the negotiation process in the coming months with private owners. Further consultation has been agreed upon by the sponsors as well as documentation of the process in the form of a basic Resettlement Action Plan (RAP), which will include the proposed actions of the City of Moscow, who are ultimately responsible for the Municipal tenants. The RAP’s implementation will be monitored over the next year, with regular reporting on progress to IFC. At this time the project appears to be in compliance with PS5. However, the sponsor will be required to complete a RAP as per the ESAP, including a time bound plan on adequate community engagement, consultation, monitoring and reporting on the implementation of the relocation and alerting IFC to any issues of substance that may arise during the process.

Cultural Heritage

The buildings that will be demolished for the expansion project were originally built in the second part of 19 century. Presently the company is carrying out consultation with the Heritage Agency “Moscomnasledie” due to the integrity of other neighbouring buildings, to explore options for the 2 facades of the buildings facing the street, and in order to preserve them for heritage purposes. They will confirm this with IFC as per the ESAP.

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