Established in 2000, Apollo Health and Lifestyle Limited ("AHLL" or the "company") is a wholly owned subsidiary of Apollo Hospitals Enterprise Limited ("AHEL" or "Apollo"), a long standing IFC client and the leading private healthcare provider in India. Initially operating neighborhood family clinics under the franchise business model, since 2011 the company has been refocused as an owner and operator of specialized clinics covering a number of key areas of growing demand including specialty care.As on 30th June 2015, AHLL directly owned Apollo Clinics (30 owned and 34 franchisee clinics) and Diagnostics (four reference laboratories and 21 collection centers). In addition, the company has following operations under its subsidiaries:Apollo Sugar Clinic Limited (ASCL): Centers focusing on Type 2 diabetic and pre diabetic patients. Currently, 25 centers either as advanced diabetic management center (ADMC) in-hospital, stand-alone and shop-in-shop (SIS i.e. located within a clinic).Apollo Dialysis Private Limited (ADPL): operating dialysis centers; currently four centers (two stand-alone, one SIS and one public-private-partnership center within a government hospital).Alliance Dental Care Limited (ADCL): currently 73 centers; either as stand-alone clinics or SPAs or express SIS located in a clinic or a hospital.Apollo Specialty Hospitals Private Limited (ASHPL) - Cradle (women and children focused hospitals) and Spectra (ambulatory facilities focusing on minimal invasive/short stay surgeries) are operated under ASHPL. Currently company has five own Cradle centers and three more Cradles will get operational (including a standalone in-vitro fertilization center) in second half of FY16. As regards Spectra, company has 10 centers across India which are mainly the centers acquired as a result of acquisition of Nova Specialty in 2015. One Cradle is operated under the franchisee model.The company plans to grow the number of facilities under its control to approximately 1,300 by 2019.The proposed investment is an equity investment of US$38 million, alongside a reputable co-investor, for funding (a) expansion capex to open approximately 1,100 new centers, and (b) to cover the losses that will continue to accrue until the centers reach maturity ("the project"). The project also includes the acquisition of "Nova", India's leading ambulatory care provider, which was closed earlier this year.
OVERVIEW OF IFC'S SCOPE OF REVIEW
IFC's review of the proposed investment consisted of appraising technical, environmental, health and safety (EHS) and social information submitted by AHLL including on EHS permits, Human Resource (HR) policies, quality management procedures, corporate social responsibility and information related to life and fire safety. In addition, discussions were held with the company's senior management, Head of medical services, HR head and Projects head, regional medical services representatives as well as operations head, quality coordinators at the visited hospitals and center heads at the clinics.The appraisal also included site visits in February 2016 to: (a) Apollo Clinic, Spectra, Cradle and a reference laboratory in Bengaluru; and (b) Apollo Spectra and Cradle in New Delhi, India.
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 - Assessment and Management of Environmental and Social Risks and ImpactsPS 2 - Labor and working conditionsPS 3 - Resource Efficiency and Pollution PreventionPS 4 - Community Health, Safety and SecurityIf IFC's investment proceeds, IFC will periodically review the the project's ongoing compliance with the Performance Standards
All clinics, centers and hospitals are located in leased spaces. The company identifies the required space and develops them (with interiors, equipment and furnishings) as per requirements. Therefore, no expropriation of land is envisaged for the project and no physical or economic displacement has been/is expected to be caused by the company's activities; consequently, IFC Performance Standard (PS) 5 (Land Acquisition and Involuntary Resettlement) is not applicable.The company's operations are and will typically be located in urban or sub-urban areas and, therefore, the type of risks and impacts envisaged in PS6 (Biodiversity Conservation and Sustainable Natural Resource Management), PS7 (Indigenous Peoples) and PS8 (Cultural Heritage) are not applicable. Going forward, as part of the management systems and procedures (discussed below under PS1), AHLL will screen future projects with respect to IFC PSs requirements.
ENVIRONMENTAL AND SOCIAL CATEGORIZATION AND RATIONALE
Key E&S risks and issues related to this Category B project include: adequate social and environmental assessment of the impacts of the project; the company's capacity and systems to manage social, environmental, health and safety aspects of its existing and proposed operations in compliance with legal requirements as well as IFC Performance Standards (PSs) and World Bank Group (WBG) Environment, Health and Safety (EHS) Guidelines (General, Health Care Facilities); engagement with local communities in accordance with local requirements and IFC PSs; assurance of fair, safe and healthy working conditions during both construction and operation; management of wastes (particularly hazardous biomedical waste), air emissions and liquid effluents; life and fire safety (L&FS) management for all buildings in accordance with WBG General EHS Guidelines; and resource efficiency (water and energy efficiency).
**Information on IFC's Policy and Performance Standards on Environmental and Social Sustainability can be found at www.ifc.org/sustainability
ENVIRONMENTAL AND SOCIAL MITIGATION MEASURES
IFC's appraisal considered the environmental and social management planning process and documentation for the project and gaps, if any, between these and IFC's requirements. Where necessary, corrective measures, intended to close these gaps within a reasonable period of time, are summarized in the paragraphs that follow and (if applicable) in an agreed Environmental and Social Action Plan (ESAP). Through the implementation of these measures, the project is expected to be designed and operated in accordance with Performance Standards objectives.
PS 1: ASSESSMENT AND MANAGEMENT OF ENVIRONMENTAL AND SOCIAL RISKS AND IMPACTS
Identification of E&S Risks and Impacts: The built-up areas for the clinics/centers and hospitals are typically less than the regulatory threshold level of 20,000 m2 beyond which the company is required to undertake a formal Environmental and Social Impact Assessment (ESIA) study and seek prior environmental clearance. The company, however, identifies and manages E&S risks and impacts associated with its operations through compliance with applicable E&S regulatory permits and requirements.E&S policy and management programs: AHLL has quality management policy and procedures in line with the requirements of National Accreditation Board for Healthcare providers (NABH). The quality procedures cover key E&S aspects including employee and patient safety; fire safety, emergency management; bio-medical waste management, and infection control. A specific safety manual is part of the quality procedures which covers fire safety, spill response, emergency response for various types of emergencies and safety during construction/renovation. All policies and procedures are available on company's intranet and accessible to its employees. The procedures were upgraded and launched by AHLL in August 2015 and the company is in the process of ensuring full implementation of these procedures at its clinics/centers and hospitals.As per the ESAP, in addition to its quality management policy, AHLL will establish an overarching corporate Environmental, Health and Safety (EHS) Policy defining the E&S objectives and principles for all operations that will guide the company to achieve E&S performance in compliance with the applicable legal requirements and IFC PSs. The EHS Policy will provide a framework for the environmental and social assessment and management process for all existing and future clinics/centers and hospitals.Organizational capacity and competency: The Quality & Medical Services teams are responsible for ensuring implementation of quality management systems at all the AHLL facilities. The teams together, headed by Head - Quality Systems and Director of Medical Services, have representatives in each of the regions. For clinics/centers, the clinic head is responsible for implementation of the quality systems, monitored by the regional quality resource and supported by the medical services representative for clinical aspects. The operations and quality team at the respective Spectra and Cradle implement the quality systems. Regular audits are conducted in all the clinics/centers/hospitals, by external surveyors from AHEL's JCI accredited hospitals, central quality team and medical services.Each of the Spectra and Cradle hospitals have a maintenance team on-site which is responsible to operate and maintain various utilities including life and fire safety equipment. For clinics/centers, the maintenance team is based on a regional level.AHLL has a central projects team which is responsible for establishment of new facilities (clinics/centers/hospitals). The team manages new assets proposed for leasing.As set forth in the ESAP, AHLL will assign a person at the corporate level, within agreed timelines, who is dedicated to E&S management of all hospitals/centers in order to ensure continued compliance with national legal requirements and IFC PSs and WBG EHS Guidelines.Emergency Preparedness and Response: As mentioned above, as part of the safety manual, AHLL has developed response plans for different emergency scenarios including fire, earthquake, and spills. Based on the site visit and discussions at the visited facilities, it was noted that though basic fire safety training has been completed, the emergency response plans are still in the process of being fully implemented with specific plans to be developed for each of the facilities, formation of teams required for various emergencies, regular class room training and drills covering all potential emergencies, preparation of plans for total building evacuation and patient triage process especially for non-ambulatory patients and babies in the neo-natal intensive care unit (NICU). As per the ESAP, AHLL will ensure development of the site specific emergency response procedures at all its facilities (with Spectra and Cradle facilities as priorities) with specific procedures on total building evacuation and patient triage process. Regular class room training and mock drills (including evacuation drills) will be conducted for all types of expected emergencies covering all shifts. Findings of drills will be analyzed with corrective action taken to continually improve emergency preparedness. Examples of specific response plans, training and drill records will be shared with IFC for few of the Spectra and Cradle facilities.Monitoring & Reporting: As part of continuous quality improvement, all the clinics/centers and hospitals monitor number of quality indicators including health and safety key performance indicators (KPIs) such as injuries rates and severity, including patient and personnel falls, needle stick injuries and other injuries posing transmission risk of blood-borne diseases, other incidents and accidents. All accidents and incidents are reported in a specific format and investigated as per the protocol.Self-audits are conducted at the Spectra/Cradle hospitals by the operations team and quality coordinators and by the clinic heads at the clinics/centers. Quality audits are conducted in all the units by external surveyors from AHEL's JCI accredited hospitals, central quality team and medical services representatives in the form of Quality for Excellence (Q4E) Surveys. The audit format (among other quality parameters) includes review of bio-medical waste management, fire safety, hazardous materials management and general facility management practices. In addition, facility safety audits are conducted internally on an annual basis. The findings are shared with the operations head for Spectra/Cradle and with center heads and regional heads for the clinics/centers. On a corporate level, status of implementation of the quality procedures is discussed in the Quality Steering Committee meeting, chaired by the CEO, all the Business Unit heads, DMS & Quality Head.To strengthen the E&S monitoring and review, as per the ESAP, the company will develop a procedure on EHS monitoring which will specify minimum EHS parameters (including energy and water consumption, general and hazardous bio-medical waste generation and disposal, number and findings of mock drills and evacuation drills conducted for fire and other emergencies, health and safety injury rates for personnel and contractors, liquid effluent and air emission quality testing, facility indoor air quality, leakages and spills from storage tanks for compressed gases and fuels, infection rates, etc.) to be monitored, monitoring frequencies and the definition of thresholds that signal the need for corrective actions. Monitoring thresholds will be consistent with those referenced in the applicable WBG EHS Guidelines (General, Health Care Facilities).Regular monitoring will be conducted for the defined parameters as per the procedure and the company will ensure corrective actions are taken as necessary based on the results. The EHS performance of hospitals/clinics/centers will be regularly documented in an integrated format as per the defined management system processes and reviewed by the management.
PS 2: LABOR AND WORKING CONDITIONS
The company has a total workforce of about 2700 employees, which is expected to increase to 4,250 with the new facilities by 2019.HR Policies and Procedures, Working Conditions and Terms of Employment: The has documented its HR policies on various aspects including employee benefits, separation, relocation, travel, disciplinary action, whistle blower, leave management etc. Currently the policies are available with HR representatives and communicated during induction. The company is planning to install a HR management software and making the policies accessible through the software.To align the HR policies with the PS2 requirements, as set forth in the ESAP, the company will develop additional procedures/policies on freedom of association, protecting work force (child labor and forced labor) and non-discrimination. Further, as many of the employees at the hospitals may not have computer access, as per the ESAP, the company shall make the policies accessible in local language through other means, e.g. displays, handbook.Freedom of Association: The applicable national laws allow formation and registration of trade unions. AHLL does not restrict formation of unions, however, currently there are no staff unions at any of the AHLL clinics/centers/hospitals. As discussed above, the company shall document a specific policy on freedom of association.Non-discrimination and Equal Opportunity: As discussed above, as per the ESAP, the company will include a policy on non-discrimination and equal opportunity in its HR policies.Grievance Mechanism: The company has a documented grievance handling procedure included in the HR policy. Grievances received are first directed to the concerned head of department (HOD) for redress and then escalated progressively to the Unit HR department and the Grievance Council that exists at both the corporate and unit level. The grievance handling time is defined in the procedures. The policy provides options for the employees to skip a level in case their grievance is against the relevant officer dealing with the grievances.In addition, for addressing sexual harassment related complaints, a separate policy has been developed and implemented.Prevention of child labor and forced and bonded labor: No instances of child, forced and bonded labor were observed. As discussed above, as per the ESAP, AHLL will develop a specific policy on prevention of child labor and forced and bonded labor.Occupational, Health and Safety (OHS): As mentioned under PS1, a specific safety manual is part of the quality procedures which covers fire safety, spill response, emergency response for various types of emergencies, fall prevention for patients, spill management, and safety during construction/renovation. Additionally, the company has an infection control manual which includes procedures on intravascular device usage and care, management of spills of body fluids, blood and microbiology cultures, management ofneedle-stick injury, accidental inoculation and percutaneous mucus membrane exposure to blood and body fluid substances, etc.A training calendar is prepared for all facilities. Regular training programs were noted to be conducted at the visited facilities on various safety related topics including fire safety, facility safety, bio-medical waste handling, incident reporting, infection control and spill handling. The data on patient falls, needle stick injuries, and incidents are recorded. All accidents and incidents are recorded and investigated through a root cause analysis process. Required investigations and corrective actions are taken in case of needle stick injuries.Workers engaged by third parties: Third party workers are employed at the AHLL facilities mainly for housekeeping and security. The HR department monitors compliance of the contractors with respect to labor laws for their workers. The contractors provide documentary proof for payment of social benefit contribution before receiving payments from AHLL.Typically, the company develops clinics/centers/hospitals in leased buildings where the construction work is in the scope of land owner and AHLL has no responsibilities and limited management control. However, the fit-out and furnishing work at the sites is undertaken by contractors and managed by AHLL's projects team. Though safety manual has guidelines for safety during construction and renovation, they are mainly limited to construction/renovation undertaken at operational facilities. As per the ESAP, the company shall document specific guidelines to be followed by the contractors at the new facilities under fit-outs. The guidelines shall include monitoring process, check-list and other documentation of OHS performance on-site by the company. The guidelines shall be included in the contracts signed with various contractors and AHLL shall monitor its implementation on-site.
PS 3: RESOURCE EFFICIENCY AND POLLUTION PREVENTION
Energy Supply and Air Emissions: Electricity is sourced from the public grid. As standard back-up systems for grid failure, diesel generator (DG) sets and UPS battery back-up systems are installed. At critical medical service facilities (e.g. ICU, OT), individual battery back-up systems are installed in addition to the overall back-up systems. The DG sets are provided with acoustic enclosures and stack height as per regulatory requirements. As per the ESAP, as part of its corporate EHS monitoring procedure (discussed under PS1), the company shall conduct regular air emissions monitoring of stack emissions from the DG sets (or any other source of air emissions, if there) to ensure compliance with the national standards as well as WBG General EHS guidelines.Resource Efficiency: As described above, all the clinics/centers and hospitals are located in leased buildings. Therefore, the company has limited opportunity for implementation of resource efficiency measures. However, as part of the furnishing of new hospitals, the company has initiated installation of solar water heating system and LED lighting. As per the ESAP, the company shall develop a formal resource efficiency program which shall describe company's practices in considering energy efficiency during site election, resource efficiency measures to be implemented at its facilities; monitoring, recording and benchmarking of resource consumption across its facilities; and efficiency goals and targets.Greenhouse Gases (GHG) Emission: Based on the data available for existing clinics/centers and hospitals, the average annual electricity and diesel consumption for a clinic/center and a hospital are approximately 42,000 - 51,600 kWh and 800 - 1,300 liters for a clinic and 450,000 - 600,000 kWh and 2,000 - 4,000 liters for a hospital respectively. The electricity and fuel consumption varies from facility to facility due to size of the facility, local power conditions, etc. Considering these averages and the expected growth in number of owned clinics and hospitals, the expected GHG emissions from the project are expected to be 8,500 tons CO2 eq/annum.Water and Wastewater: Water for all the hospitals is sourced from the borewells installed inside the hospital facilities or public supply. Reverse Osmosis (RO) plants have been installed to meet clinical needs. For drinking, packaged drinking water is purchased.The domestic effluent from the clinics/centers is discharged into the public sewer. As the visited hospitals, the infectious effluent (e.g. from the operation theaters, central sterilization) is disinfected with sodium hypochlorite before it is discharged in the public sewer except at Spectra in Bangalore where a sewage treatment plant (STP) has been provided. The company reviews the locally applicable legal requirements to ensure provision of an STP. Currently the company is not testing the wastewater quality and thus as per the ESAP, the company will ensure regular testingof the wastewater (at all its hospitals) to ensure compliance with the national standards and WBG EHS guidelines for Health Care facilities.Bio-Medical Waste (BMW) Management: All visited clinics and hospitals were noted to have BMW management procedures which include the system of appropriate sorting, labeling, handling, storage and disposal of BMW and is consistent with the applicable legal requirements. Visited clinics and hospitals were noted to have a segregated BMW storage area where waste is stored in color coded bags. BMW generated at medical areas are segregated at source as per the waste management procedures and bagged into color coded bags. Segregated BMW is removed from the medical areas to BMW storage area from where it is collected by an authorized external agency for disposal.
PS 4: COMMUNITY HEALTH, SAFETY AND SECURITY
Life and Fire Safety (LFS) Systems: The visited clinics/centers were noted to be provided with fire extinguishers and escape routes with markings.As regards the visited hospitals, they were noted to be provided with basic LFS infrastructure and systems including fire water pumping system, smoke detectors; fire exit signages; different types of fire extinguishers; fire hydrants; manual call points; fire hoses/reels at every floor; fire alarm control panel, public address system and sprinkler system (all visited hospitals except Spectra at Bangalore). However, based on a preliminary review, in some of the visited facilities there is a need to improve compartmentation, provision and protection of egress routes and fire water storage and pumping capacity. These provisions need to be ensured to meet the requirements of applicable national and local LFS codes and obtain the required permits.Given the above, as a priority, the company will commission a qualified LFS expert (acceptable to IFC) to review a sample of Spectra and Cradles hospitals with respect to applicable national and local requirements for Health Care Facilities. Based on the review, if found necessary, the company will agree with IFC on an enhancement plan for existing Spectras and Cradles hospitals to minimize LFS risks and comply with legal and national code requirements in a reasonable time frame.For any future greenfield buildings to be constructed or leased/acquired and significantly renovated as part of the project, the company will ensure compliance with National Building Code (NBC) of India, strategic requirements of which are consistent with internationally recognized NFPA 101 LFS code. As required under the LFS section of the WBG General EHS Guidelines (section 3.3), the company will submit to IFC design and post-construction professional certifications that each such facility is built in accordance with the NBC and other applicable local LFS code. Any remedial measures needed to bring the building into compliance with IFC's requirements will be completed within a timeframe agreed with IFC.Also, in consultation with LFS experts the company will develop a standard screening check-list which shall be used for evaluation of any brownfield buildings potentially being considered for lease for a Spectra or Cradle hospitals. This evaluation shall form part of the company's due diligence process. Final decision on acquisition shall be taken only with respect to the upgrades needed to conform to the company's LFS policy.Community Exposure to Disease: AHLL implements Infection Control Program and procedures all its clinics/centers and hospitals to prevent nosocomial infections for the patients and personnel. In addition to the engineering and administrative controls such as proper ventilation systems with independent air handling units (AHUs) for critical care rooms and architectural segregation, the company has documented procedures on various aspects relatedto infection control including cleaning, disinfection and sterilization, access control, kitchen, sanitation and food management, hand hygiene, etc. Each hospital has an infection control nurse to monitor implementation of the program and procedures.Security Personnel: All hospitals are guarded with unarmed security guards from private security agencies. Security personnel are trained to manage the entry/exit gates, vehicular movement, pedestrian movement, lifts, parking areas, hospital floors, assist in emergency evacuation and overall movement of visitors inside the hospital premises.Food Safety: Only the hospitals (Spectras and Cradles) have kitchens. The food is processed under regulated quality and sanitation controls. All food items are protected from contamination and spoilage. All cooking and food storage areas are regularly cleaned and all equipment and utensils are washed regularly. The company has provided adequate hand washing and hand- facilities throughout the food service areas. Unauthorized personnel are not allowed inside the food service area and only persons employed by food services are allowed behind the serving line or in the areas where food is being prepared.