Strategic Report: Sustainable Development Highlights

Mediclinic takes a sustainable, long-term approach to business, putting patients at the heart of its operations and consistently delivering high-quality healthcare services. In order to deliver on these priorities, the Group upholds the highest standards of clinical governance and ethical behaviour across its divisions, invests significant time and resources in recruiting and retaining skilled staff, makes considerable investment into its facilities and equipment and respects the communities and environment in the areas in which it operates.

This report provides an overview of the Group’s sustainability initiatives, with specific reference to our material sustainability issues. For more information, please refer to the detailed Sustainable Development Report and the GRI Standards Disclosure Index.

This is the first year that the Company is required to include a non-financial information statement in the strategic report in accordance with the Companies, Partnerships and Groups (Accounts and Non-financial Reporting) Regulations 2016. The regulations implemented the EU Non-financial Reporting Directive 2014/95/EU requiring disclosure of information about policies, risks and outcomes regarding:

This report, read with the Sustainable Development Report, constitutes the Group’s non-financial information statement.

During the reporting process, minor corrections have been made to the prior year data as reported in the previous reports.

STAKEHOLDER ENGAGEMENT

Mediclinic recognises its accountability to its stakeholders and is committed to effective and regular engagement with them, and to publicly report on its sustainability performance. Mediclinic’s key stakeholders are those groups who have a material impact on, or are materially impacted by, Mediclinic and its operations, including: patients, doctors, employees and trade unions, suppliers, healthcare funders, government and authorities, industry associations, investors, the community and the media. The Group’s key stakeholders, methods of engagement, topics discussed or concerns raised are outlined in the Sustainable Development Report. The Board’s engagement with stakeholders is also reported on in the Corporate Governance Statement.

Effective communication with stakeholders is fundamental in maintaining Mediclinic’s corporate reputation as a trusted and respected provider of healthcare services and positioning itself as a leading international private healthcare group. Mediclinic’s commitment to its stakeholders to conduct its business in a responsible and sustainable way, and to respond to stakeholder needs, is entrenched in the Group’s values and supported by the Group Code of Business Conduct and Ethics. A wide variety of communication vehicles are used to engage with stakeholders, which serve as an impact assessment to assess stakeholders’ needs and to effectively respond thereto. Stakeholders’ legitimate expectations have been taken into account in setting the Group’s key sustainability priorities, as reported on throughout this report. The Group continually looks for ways to improve its use of online channels to communicate with its stakeholders through the corporate website and webcasting.

AWARDS AND ACCOLADES

GROUP
  • Mediclinic International confirmed as a FTSE4Good* constituent, which index recognises the performance of companies demonstrating strong environmental, social and governance (“ESG”) practices.
  • Mediclinic International confirmed as a FTSE/JSE Responsible Investment Index constituent, which index recognises such companies listed on the JSE who meet the required FTSE Russell ESG rating.
  • Mediclinic International achieved global A List status from CDP (Carbon Disclosure Project) for water conservation.
Switzerland
  • Hirslanden ranked first in the healthcare sector and among over 500 enterprises in Switzerland and Liechtenstein by Best Recruiters, an independent recruitment study.
  • All 17 Hirslanden hospitals are registered as CO2-reduced businesses by the Energy Agency of the Swiss Private Sector on behalf of the Swiss Federal Office of Energy.
Southern Africa
  • Mediclinic Southern Africa’s brand ranked 16th in the Top 20 Brand South Africa rankings for 2017, being the only South African healthcare provider recognised by Brand Finance and Brand Africa.
  • Eight Mediclinic Southern Africa hospitals included in Discovery Health’s Top 20 Private Hospitals in South Africa 2017, based on the results of their patient surveys.
  • Eight Mediclinic Southern Africa hospitals awarded the Katrin Kleijnhans Quality Trophy from the Council for Healthcare Services Accreditation of Southern Africa (“COHSASA”) during 2017, recognising their substantial contribution to quality improvement during the COHSASA accreditation process.
  • Mediclinic awarded Go-Live Project of the Year at the OpenText Digiruption Indaba Awards for 2017 for the successful integration OpenText Extended ECM and SAP SuccessFactors consolidating human resources record keeping into a single, trusted database.
UAE
  • Mediclinic Dubai Mall Clinic recognised as the best Medical Clinic of the Year at the Mother, Baby and Child Awards 2017.
  • David Hadley, CEO of Mediclinic Middle East, recognised as the Healthcare Business Leader of the Year at the Gulf Business Awards 2017.
* FTSE Russell (the trading name of FTSE International Limited and Frank Russell Company) confirms that Mediclinic has been independently assessed according to the FTSE4Good criteria, and has satisfied the requirements to become a constituent of the FTSE4Good Index Series. Created by the global index provider FTSE Russell, the FTSE4Good Index Series is designed to measure the performance of companies demonstrating strong Environmental, Social and Governance (ESG) practices. The FTSE4Good indices are used by a wide variety of market participants to create and assess responsible investment funds and other products.

MATERIALITY ASSESSMENT

Mediclinic has many economic, social and environmental impacts, including creating employment opportunities, training and developing employees, responsible use of natural resources, investing in local communities and black economic empowerment in South Africa.

In terms of the Group Sustainable Development Policy, the Clinical Performance and Sustainability Committee annually reviews the Group’s material sustainability issues to ensure management initiatives are directed at those sustainable development issues that are most significant to the business, and which directly affect the Group’s ability to create value for its key stakeholders. The materiality assessment identified the following three material issues, as illustrated in Figure 1, which constitute the focus of this report:

  • developing an engaged and productive workforce;
  • minimising our environmental impacts; and
  • being an ethical and responsible corporate citizen.

The Group’s strategy, performance, risks and sustainability are inseparable. The link between the Group’s three material sustainability issues and the Group’s strategy (as further detailed in Our Strategy, Progress and Aims) is indicated.

MATERIAL ISSUE 1:
DEVELOPING AN ENGAGED AND PRODUCTIVE WORKFORCE

Highlights

  • Implementation of world-class workforce optimisation initiatives and the integration of these principles in the relevant business processes
  • Continued investment in training and skills development to maintain and improve quality service delivery
  • Entrenching the employee engagement survey and embedding follow up actions across the Group
  • Continued people management development for line managers
  • Ongoing implementation of a standardised human resources ICT system

WHY THIS IS IMPORTANT TO THE BUSINESS

The attraction of suitably qualified healthcare professionals is essential in delivering the Group’s Patients First strategy. We aim to provide a working environment with a supporting culture where employees can thrive. The continued investment in initiatives that support this overarching goal is visible in the turnover of scarce skills that has shown a significant decline. These initiatives include engagement, corporate health and wellness, continuous development, mentoring and coaching. It requires a long-term focus and genuine transformation of practices in order to be successful. These initiatives will be continued and expanded to create a diverse and inclusive environment that enables optimal performance of employees.

Workforce optimisation has been a key focus for the year. Resources were allocated to analyse current workforce practices with the intention to optimise the utilisation of human resources especially in the clinical environment. A new methodology of workforce planning and scheduling was piloted and integrated during the annual budgeting process. Continued focus on workforce planning and forecasting will ensure that the goal of operational efficiency is achieved as required in order to deliver on the Patients First strategy.

LINK TO GROUP STRATEGY

  • Invest in employees
  • Improve safe, quality clinical care
  • Improve patient experience
  • Improve efficiency

KEY STAKEHOLDERS

  • Employees and trade unions
  • Doctors
  • Patients

RISKS TO THE BUSINESS

  • Inability to recruit healthcare practitioners to meet business demand
  • Poor clinical outcomes and services
  • Medical malpractice liability
  • Reputational damage
  • Delayed new nursing qualifications framework, causing a gap in the education pipeline
  • Ageing nursing workforce and noticeable trend of earlier retirement of nursing professionals
  • Ineffective management teams
  • Poor staff engagement and wellness
  • Fraud and ethics failures

KEY PERFORMANCE INDICATORS

* Refer below for more on the increase in the turnover rate.
* The prior year employee engagement index of Mediclinic Middle East excluded the employees of its Abu Dhabi operations.

RISK MITIGATION

  • Extensive training and skills development programmes
  • Governance of suitable selection processes with focus on skills assessments, employment references and verification of credentials
  • Targeted sourcing and recruitment initiatives, with a strong focus on agile sourcing techniques ensuring that best fit candidate talent is channelled to appropriate vacancies, supported by a seamless hiring process
  • Proactive international recruitment programme supplementing anticipated medium-term skills gaps
  • Tailored retention strategies, supporting the retention of priority audiences within each business unit
  • Succession planning and/or career management initiatives within scarce skills disciplines, ensuring proactive development of high-performing employees with potential to supervisory and leadership roles
  • Deployment of integrated talent strategies in support of core business areas
  • Employee engagement and satisfaction monitoring through standardised process

POLICY, APPROACH AND PERFORMANCE

The human capital environment is strongly supported by policies and best practice guidelines and is governed to ensure compliance to achieve best practice globally and to minimise possible risks within the human resource environment.

Through the internalisation of the human resources strategy, the focus remains on the harmonisation and embedding of enhanced human resources processes and practices. This internalisation is achieved through the standardisation of processes where possible, sharing of best practice, and system integration. The Human Resources (“HR”) function is thereby positioned as an enabling partner delivering visible, credible and value-adding services to the business where required on a continuous basis.

Employee recruitment and retention

The talent supply of scarce skills remains on the strategic agenda of the Group and is regarded as a key enabler of reaching the goals of the Patients First strategy. The ever-increasing risk of not obtaining the right skills in the future due to a variety of reasons, is clearly evident in a global context. This has urged the Group to take deliberate and proactive action in building a secure talent pool in the areas where necessary.

The globalisation of relevant human capital management processes will continue to put emphasis on talent metrics and measurable data across divisions, which enables the identification of trends and risks to be addressed proactively.

The implementation of an integrated human resources management system has gained momentum and line managers and employees alike are positively impacted. Further rollout of additional modules is scheduled to be phased in over a three-year period.

The Group’s workforce composition is provided in Figure 2. Controllable employee turnover rate is provided above, indicating an increase across all divisions. Although not a significant increase, the reasons for employee turnover are monitored in a rigorous manner and themes are proactively addressed to minimise the loss of employees. With the ever-increasing shortage of qualified staff, we are experiencing increased competition in the market place for quality staff. As a result, emphasis is placed on retention and effective utilisation of available skills. To address this, various measures are in place with the aim to be regarded as an employer of choice: regular engagement, offering attractive working conditions, career development, a consistent performance management system, fair remuneration practices. The divisions’ turnover rate by age group and gender, new employees versus employee terminations and return to work after maternity leave are provided in the Sustainable Development Report.

Figure 2: Workforce composition

Training and skills development

The Group continues to invest significantly in training and skills development to maintain and improve quality service delivery. The Group’s commitment to provide quality care for its patients can only be ensured if its staff have appropriate, evolving skill sets, which is reflected in the number of learning initiatives undertaken each year. The percentage of payroll invested in training and skills development by each of the Group’s operating divisions is provided above.

Performance management

A consistent performance management system is applied throughout the Group, which allows us to identify and manage the training needs of individual employees, and to discuss career development. Performance tracking discussions take place on a continuous basis throughout the Group. There is a dedicated commitment to optimise the quality of these discussions where expectations regarding performance and development are shared and personal development plans compiled accordingly. These discussions also provide the opportunity to translate the organisational strategic goals to individual employee objectives, activities and deliverables. Mediclinic Southern Africa continuously enhances the support provided to line managers. There is an e-learning tool which helps new and existing managers to enhance their knowledge about the process in a self-paced manner.

Formal performance reviews are conducted on a bi-annual basis. During the past 12 months, 88.3% of employees at Mediclinic Southern Africa received formal performance reviews. At Hirslanden, 100% of employees received formal performance reviews during the year; and at Mediclinic Middle East, 81% of employees received formal performance reviews.

Succession planning and career management

Strong leaders have proven to be of great value to the business and therefore resources have been invested to embed sufficient succession planning and career management towards key functional roles across the business. This will proactively enhance and develop leadership. Succession planning is standardised on an organisational level in all three operating divisions and a Group talent review is performed annually. Critical talent as well as high-performing individuals with potential are identified and supported through tailored development initiatives. An inter-division development programme which offers a series of secondments across divisions has been designed to help these individuals excel at Mediclinic. The programme is currently implemented at organisational level for talent with the potential to be successors to a key position in their own division or across divisions within the larger Group. The programme aims to provide priority talent (either critical talent or high performers with potential), the opportunity to gain cross-division exposure.  All divisions have received the programme with great enthusiasm and the Group is proud to continue to grow this development opportunity to the benefit of all.

Employee remuneration, recognition and benefits

The Group remunerates employees in a manner that supports the achievement of the Group’s vision and strategic objectives, while attracting and retaining scarce skills and rewarding high levels of performance. This is achieved through establishing remuneration practices that are fair, reasonable and market-related while at the same time maintaining an appropriate balance between employee and shareholder interest. To encourage a performance-driven organisation, the Group rewards employees for achieving strategic objectives as well as individual personal performance targets. Benefits to employees may include a retirement fund and medical aid scheme. The Group further covers the liability insurance for medical staff and other employees where liability insurance is required. Managers who are eligible to receive variable remuneration receive short-term incentives and senior management receive a combination of short and long-term incentives. The Group’s management remuneration structures consist of a fixed (guaranteed base salary and benefits) and a variable (short-term and long-term incentives) component.

Employee benefits and the value they add to the overall employment proposition are key factors in attracting and retaining high-calibre staff. Details of benefits offered are included in the Sustainable Development Report.

Employee health and safety

The Group recognises the role it has to play towards employee wellness and believes in promoting employee health and reducing absenteeism. The Group is committed to supporting the overall well-being of employees and recognises the importance of employee wellness in the workplace, building a more caring culture for its employees by applying sound wellness practices.

Health and safety policies and procedures are in place across the Group to ensure a safe working environment for the Group’s employees, patients and its visitors. The health and safety of the Group’s employees are essential and contribute to the sustainability of quality care to patients. The programmes and procedures implemented by the various business units to mitigate health and safety risks are outlined in the Sustainable Development Report.

Employee engagement

In 2015, Mediclinic, in partnership with Gallup, introduced the Your Voice employee engagement programme across all operating divisions to measure levels of engagement, identify gaps at a departmental level and support line managers in developing action plans to address concerns.

Overall, the Group achieved a 77% (2017: 71%) participation rate in the Your Voice survey and 40% (2017: 36%) of employees showed high levels of engagement, as illustrated above. The 2017 Your Voice survey identified predominant strengths and opportunities in terms of the employee engagement levels of Mediclinic. Mediclinic continued to perform well on the foundation elements of employees knowing what is expected of them and having the appropriate materials and equipment to perform at work.

Labour relations

The Group believes in building sound long-term relations with its employees and employee representatives, which supports its goal of being the employer of choice in the healthcare industry. This is measured by the Your Voice employee engagement survey and continuous assessment of the Group’s employment conditions.

The Group respects and complies with the labour legislation in the countries in which it operates and ensures that the internal policies and procedures are evaluated regularly to accommodate continual amendments to relevant legislation. The employee relations policies of the operating divisions, which deal with matters relating to misconduct, incapacity of employees and the disciplinary and grievance procedures, are communicated to new employees as part of their on-boarding process and are also available to all staff to ensure that employees are aware of the avenues to put forward grievances, should they have the need to.

Details of trade union membership throughout the Group is provided in the Sustainable Development Report.

MATERIAL ISSUE 2:
MINIMISING OUR ENVIRONMENTAL IMPACTS

Highlights

  • Since January 2014, the entire Hirslanden electricity supply has been generated from 100% sustainable electricity
  • Mediclinic International was included in the global A List for leadership and performance by corporate environmental action, showing leadership on water in the CDP Water Disclosure Project
  • Total consumption and intensity per bed day sold for both energy and water decreased in Mediclinic Southern Africa, with Mediclinic Middle East and Hirslanden’s consumption remaining stable

WHY THIS IS IMPORTANT TO THE BUSINESS

The Group’s main environmental impacts are the utilisation of resources, predominantly energy, through electricity consumption and water, and the disposal of healthcare risk waste. The Group is fully aware of the need to use resources responsibly and is committed to minimising its environmental impacts to every extent possible.

The Group recognises the risks that regulatory changes, environmental constraints and climate change present to its operations. Potential impacts include rising costs, reduced access to facilities, interruptions in service, and incidents of extreme weather events as a result of climate change placing additional stress on operations. Additionally, climate change can lead to water shortages (especially in the UAE and in Southern Africa) and weather-induced pandemics and disease outbreaks which can cause high mortality rates.

However, the Group also believes that using resources responsibly can be a source of strategic advantage for the Group, allowing it to manage and contain its operating costs and to ensure ongoing access to water and energy supplies.

Mediclinic’s patients are always its first priority, but without natural resources, especially water, Mediclinic would not be able to provide a service to its patients. The Group takes its policies to reduce its impact on the environment very seriously and is constantly investigating new opportunities to reduce its impact on the environment.

LINK TO GROUP STRATEGY

  • Improve efficiencies

KEY STAKEHOLDERS

  • Employees and doctors
  • Suppliers
  • Governments and authorities
  • Community
  • Patients

RISKS TO THE BUSINESS

  • Business interruptions due to water shortages
  • Business interruptions due to electricity supply
  • Increased operational costs due to cost of electricity, water and healthcare risk waste
  • Reputational damage

RISK MITIGATION

  • Implementation of appropriate environmental management systems (certified by an internationally recognised body, where appropriate)
  • Implementation of the Corporate Sustainable Water Management Strategy in Southern Africa
  • Environmental impact assessments for new building projects where required
  • Introduction of renewable energy sources, such as solar photovoltaic systems, in order to reduce energy consumption and costs

KEY PERFORMANCE INDICATORS

Unless indicated to the contrary, all environmental data reported is for the 2017 calendar year (included in the CDP 2018 submission), with the prior year data for the 2016 calendar year (included in the CDP 2017 submission). This is to ensure the accuracy of the data reported and to align the reporting to the annual submission of reports to CDP.

* The intensity measures of CO2 emissions, water usage and energy consumption per bed day are not appropriate for the UAE, and not comparable with that of Southern Africa and Switzerland, as the total emissions, water usage and energy consumption include only five hospitals and 23 clinics with only outpatient consultations (i.e. no bed days). The extreme weather conditions in the UAE also negatively impact its energy and water consumption, which is being managed through various initiatives. Mediclinic Middle East has begun working towards a comprehensive energy and water reduction plan for the year ahead to decrease overall consumption.

POLICY, APPROACH AND PERFORMANCE

Effective environmental management system

The Group Environmental Policy, available on the Company’s website, aims to minimise Mediclinic’s environmental impacts and guides the identification and management of all risks and opportunities relating to water use and recycling, energy use and conservation, emissions and climate change, and waste management and recycling. Mediclinic is committed to ensuring that its environmental management systems and practices are aligned with international best practices to safeguard its reputation and provide assurance regarding the environmental quality, safety and reliability of Mediclinic’s processes and services. Environmental impact assessments are performed for all new building projects when required by legislation.

All 17 Hirslanden hospitals are registered as CO2-reduced businesses by the Energy Agency of the Swiss Private Sector on behalf of the Swiss Federal Office of Energy. This achievement recognises the contracted commitment to reduce CO2 emissions within the operations. The implemented measures are being monitored annually.

All Mediclinic Southern Africa hospitals are ISO 14001 trained, follow the same environmental management practices and are subject to annual internal audits. During the year, ISO 14001 gap audits were conducted at 38 Mediclinic Southern Africa hospitals, achieving an average score of 80%. Adhering to the system procedures and processes has a direct impact on consumption as well as the group carbon emissions and is expected to reduce the likelihood and magnitude of the risk. At year-end, 42 of Mediclinic Southern Africa’s 52 hospitals are ISO 14001 certified by an external assurance provider.

Mediclinic Middle East undertook a number of environmental initiatives and environmental events and rolled out policies which support the Group Environmental Policy. It has initiated the EHS strategy, with the aim of obtaining ISO 14001 certification of all its facilities in the future, and will be implementing further energy saving initiatives as part of Mediclinic Middle East’s overall strategic objectives during next year.

Reduction of carbon emissions

The Carbon Disclosure Project (“CDP”) is a global initiative measuring companies around the world, their reporting on greenhouse gas emissions and climate change strategies. It is regarded as a global leader in capturing and analysing data that record the business response to climate change, including management of risks and opportunities, absolute emissions levels, performance over time and governance. Participation and disclosure of the results are voluntary. The project was launched in South Africa in 2007 in partnership with the National Business Initiative, in which JSE-listed companies are measured. Mediclinic has participated in the project since 2008, initially only in respect of Mediclinic Southern Africa. Limited information on Mediclinic Middle East has also been included since 2010, although it still remains an initiative focusing mainly on Mediclinic Southern Africa’s data. Mediclinic’s CDP reports can be obtained on the CDP website, with the most recent reports also available on the Company’s website.

The operating divisions of the Group measure, with the assistance of external consultants, its carbon footprint using the GHG Protocol and includes, in varying degrees:

  • direct emissions, which in the healthcare industry will refer mainly to the emissions of anaesthetics gases (scope 1 emissions);
  • indirect emissions from the consumption of electricity (scope 2 emissions);
  • indirect emissions from suppliers, which in the healthcare industry will refer mainly to pharmaceutical, bulk oxygen and waste-removal suppliers (scope 3 emissions); and
  • non-Kyoto Protocol greenhouse gas emissions such as Freon, which is used in air-conditioning and refrigerant equipment. With the assistance of external consultants, these emissions data were converted into a carbon dioxide equivalent (“CO2e”) using recognised calculation methods, emission factors and stating assumptions made, where relevant.

The Group’s main environmental impacts are the utilisation of resources and waste which have a direct effect on carbon emissions. Items listed in the aspect register relating to regulatory compliance, healthcare risk waste, water, electricity, paper, hazardous waste and gases not only could have a significant impact on the environment, but also informs strategy on climate change related risks and opportunities.

The carbon emissions per division, reported per calendar year, are reported in the Sustainable Development Report, as summarised in Figures 3 to 5.

Figure 3: TOTAL CARBON EMISSIONS (HIRSLANDEN) (per calendar year)

* The scope 2 indirect emissions have risen due to the integration of Klinik Linde into the division. Klinik Linde has been using so called “grey electricity” (electricity from unknown sources). This sort of electricity can be derived from nuclear energy or coal power stations. In FY 2019 Klinik Linde will change its electricity supply to guarantee the whole division uses nuclear and fossil-free electricity.

Figure 4: TOTAL CARBON EMISSIONS (MEDICLINIC SOUTHERN AFRICA)

Figure 5: TOTAL CARBON EMISSIONS (MEDICLINIC MIDDLE EAST)

* Since the CDP 2017, the Mediclinic Middle East figures include the Al Noor business, whereas in previous years it only included the Dubai business, and therefore not directly comparable with that of previous years.

Energy efficiency

Electricity is the main contributor to our carbon footprint and all our divisions are taking steps to reduce their electricity consumption intensity through the adoption of ISO 14001 management standards, leading to improved operational efficiency of technical installations, introduction of various new energy-efficient and renewable technologies and changes in staff behaviour regarding energy use.

The direct and indirect energy consumption per division, for the periods as specified therein, is reported in the Sustainable Development Report.

Responsible water usage

There are various measures in place to minimise water consumption; including reclaiming water, monitoring hot water consumption and installing water meters and control sensors.

In South Africa, the Western Cape region has experienced the worst drought in history, driven by a prevailing weak La Nina weather event. This has resulted in water restrictions and threat of water cuts in the Western Cape region. The threat of prolonged dry weather could last up to three years. The City of Cape Town has indicated a "possible failure of dam systems in 2018" if there is a below average winter rainfall. Climate change predictions for the Western Cape indicate continued warming, drying and windier conditions going forward. Water disruptions have increased in the last five years in South Africa and Namibia.

A Corporate Sustainable Water Management Strategy was developed in 2016 and implemented the same year. The strategy includes actions to mitigate and address various risks associated with the water management crisis in Southern Africa, and especially the water crisis in the Western Cape. Mediclinic Southern Africa actively engaged with public policy makers and other stakeholders in the Western Cape region, and also embarked on extensive employee and patient awareness campaigns on water conservation, which all contributed to the decline in water consumption during the year. Recognising the division’s initiatives, Mediclinic South Africa received global A List status for water conservation by the prestigious CDP in 2017.

The total volume of water withdrawn from water utilities throughout the Group, for the periods as specified therein, is reported in the Sustainable Development Report.

Safe waste and hazardous waste management

Stringent protocols are followed to ensure that refuse removal within the Group complies with all legislation, regulations and by-laws. The Group regards the handling of waste in an environmentally sound, legal and safe manner as its ethical, moral and professional duty. During the reporting period, there were no incidents at the Group’s facilities or offices leading to significant spills.

MATERIAL ISSUE 3:
BEING AN ETHICAL AND RESPONSIBLE CORPORATE CITIZEN

Highlights

  • Anonymous independent ethics lines at all operating divisions
  • A three-year compliance monitoring programme was developed to enhance the existing compliance culture
  • Hirslanden supports Mercy Ships, an international charity which operates the largest non-governmental hospital ship in the world
  • Contributed R5m to the South African Department of Health’s Public Health Enhancement Fund
  • In partnership with the public health sector, Mediclinic Southern Africa performed over 100 pro bono procedures on public patients

WHY THIS IS IMPORTANT TO THE BUSINESS

Governance and corporate social responsibility are integral to Mediclinic’s approach to running a sustainable, long-term business. In line with the Group’s vision of being preferred locally and respected internationally, it:

  • enforces good corporate governance standards throughout the organisation;
  • acts as a responsible corporate citizen;
  • builds constructive relationships with its local stakeholders; and
  • acts as a valued member of the community in the regions where it operates.

The Group has entrenched a range of policies, processes and standards to support the Group’s governance and Corporate Social Investment (“CSI”) programmes and provide a framework of the standards of business conduct and ethics that are required of all operating divisions, directors and employees within the Group, such as the Code of Business Conduct and Ethics, Enterprise-wide Risk Management Policy, Fraud Risk Management Policy, Regulatory Compliance Policy and the Anti-bribery Policy.

Adherence to these policies is monitored through the various risk management and assurance initiatives implemented throughout the Group. Non-adherence to these policies is immediately highlighted as a corrective action and addressed accordingly. The Group risk management department regularly monitors the status of these corrective actions.

These policies are intended to create a culture within the Group where ethical values are displayed on a day-to-day basis. It encourages staff to be vigilant and transparent for any suspicious or unethical behaviour. These policies provide clear guidelines and frameworks to assist in achieving set objectives, for example, compliance with applicable laws and regulations. The policies are communicated to all relevant employees and where necessary training is provided. The enhanced training and awareness of Group policies are planned for the year ahead.

LINK TO GROUP STRATEGY

Although not directly linked to any particular Group strategic priority, governance and corporate social responsibility are regarded as key enablers and the basis from which the Group conducts its business.

KEY STAKEHOLDERS

  • Suppliers
  • Healthcare funders
  • Governments and authorities
  • Community

RISKS TO THE BUSINESS

  • Fines, prosecution or reputational damage
  • Inability to continue business due to legal and regulatory non-compliance or changes in regulatory environment
  • Financial and reputational damage caused by poor governance and ethical practices and inadequate risk management
  • Reputational damage at local community level due to inadequate community involvement

KEY PERFORMANCE INDICATORS

* Six high-priority cases were reported to the Group’s ethics lines during the year, all of which were investigated and closed.

RISK MITIGATION

  • Visible ethical leadership
  • Regular fraud and ethics feedback to management, the Board and relevant Board committees
  • Ethics lines available to all employees and external parties, with reported incidents monitored and investigated
  • Established Group risk management and compliance department and internal audit function
  • Compliance risks assessed as part of risk management process, with regular internal self-assessments, with necessary advice and support by the company secretarial and legal departments
  • Compliance consultant appointed to implement compliance framework and monitor compliance maturity
  • Monitoring of corporate social investment initiatives by senior management, with feedback to the Clinical Performance and Sustainability Committee

POLICY, APPROACH AND PERFORMANCE

Ethics

The Group’s commitment to ethical standards is set out in the Group’s values, and is supported by the Group Code of Business Conduct and Ethics (the “Code”) and Anti-bribery Policy, available on the Company’s website. The Code provides a framework for the standards of business conduct and ethics that are required of all business divisions, directors and employees. The Code is available to all staff and is included in new employee inductions.

The Group adopts a zero-tolerance policy to unethical business conduct, including bribery, fraud and corruption.

Any employee or external stakeholder is able to report any wrongdoing throughout the Group on a confidential basis to the ethics lines. All reports are dealt with in a non-discriminatory manner and any person making use of the independent ethics lines has the option to remain anonymous. Any form of retaliation against an employee or other person making a report in good faith shall not be tolerated. A dedicated ethics contact person per division is available to deal with matters pertaining to the Code. The number of calls received through the Group’s ethics lines is indicated above. All complaints are investigated in accordance with the Code. Over the years, the majority of calls were of a grievance nature. Only in exceptional cases has information been received that has led to the discovery of unethical, corrupt or fraudulent behaviour.

The Group’s Anti-bribery Policy governs the granting and acceptance of gifts, hospitality and entertainment, which will only be approved if it is acceptable business practice, there is a proper business case and no potential to adversely affect Mediclinic’s reputation.

The Group’s Fraud Risk Management Policy facilitates the development of controls for the prevention of fraud and corruption. Feedback on ethics and fraud is provided to the Audit and Risk Committee at every meeting, with regular feedback to the Clinical Performance and Sustainability Committee.

Further details regarding the Group’s management of these matters are included in the report on Risk Management, Principal Risks and Uncertainties and the Audit and Risk Committee Report.

Cost of healthcare

The Group contributes in various ways to a sustainable healthcare system by, inter alia, focusing on efficiency and cost-effectiveness, conducting tariff negotiations in a fair and transparent manner, expanding facilities based on need, and actively participating in healthcare reform.

The Group is focused on streamlining and centralising its procurement processes to improve efficiency and cost-effectiveness. During the reporting period, good progress was made on a range of international procurement initiatives including:

  • the classification and matching of products used across all its operating divisions to compare prices and drive procurement strategies;
  • better prices through pooling of capital equipment purchases across the three divisions;
  • volume bonus agreements with key capital equipment suppliers; and
  • direct importing and distribution of more cost-effective surgical and consumable products.

Refer to the Chief Executive Officer’s Review, Our Strategy, Progress and Aims, as well as the Divisional Reviews for initiatives to improve cost-effectiveness.

Supply chain management

In order to deliver its services, Mediclinic is dependent on a large and diverse range of suppliers, who form an integral part of the Group’s ability to provide quality hospital care. Mediclinic believes in building long-term relationships with suitable suppliers and establishing a relationship of mutual trust and respect. Regular meetings are held with suppliers to ensure continuity of service. The Group relies on its suppliers to deliver products and services of the highest quality in line with Mediclinic’s standards. Various other criteria play an important role in selecting suppliers, such as: compliance with applicable international and local quality standards, price, compliance with appropriate specifications suited for the Group’s markets, stability of the organisation and the relevant equipment brand, good-quality and cost-effective solutions, support network, technical advice and training philosophy.

The availability of products and services is imperative in enabling the Group to deliver quality care to its patients, and therefore an important criterion in its supplier selection process. Though not always the case, this often leads to local suppliers being preferred, which adds to better and faster service delivery and knowledge of local laws and regulations, particularly with regard to pharmaceutical products.

Maintain high-quality healthcare infrastructure

To ensure a safe and user-friendly environment for both its patients and employees, the Group strives to provide high-quality healthcare facilities and technology, focusing on capital investments, maintenance of facilities and optimal use of facilities. As a result, the Group continuously invests in capital projects and new equipment to expand and refurbish its facilities and the replacement of existing equipment, as well as on the repair and maintenance of existing property and equipment (refer to figures above and to the Chief Executive Officer’s Review, the Divisional Reviews and Our Strategy, Progress and Aims).

Hospitals are high-risk environments in which complex treatment processes are executed using sophisticated equipment and techniques. The process of external accreditation ensures that international standards are adhered to in all aspects of hospital operations. For more details on accreditation, please refer to the Clinical Services Report.

Information security

Mediclinic is committed to conducting its business in accordance with all applicable data protection laws as may apply from time to time in the various operating divisions. Maintaining and respecting the privacy of our employees, directors, patients, affiliated doctors, suppliers and stakeholders remains a priority. Mediclinic has reaffirmed its commitment to protect the personal data of its stakeholders by embarking on a group-wide data privacy project to align and ensure compliance with relevant data protection laws, as may be applicable in the various countries of operation, including the European Union’s General Data Protection Regulation (“GDPR”), widely regarded as the gold standard for data protection. The Group Privacy and Data Protection Policy has been aligned to the GDPR standards and various initiatives are underway to ensure that core components are legally compliant by 25 May 2018, which is the date the GDPR will come into effect. The project will be rolled out to the rest of the Group thereafter while ensuring that other applicable data protection laws are also complied with.

Information security policies and controls are in place throughout the Group regulating, inter alia, the processing, use and protection of own, personal and third-party information. This is further entrenched through ongoing user training, security awareness programmes and certification courses in information security. Flows of personal data across country borders are dealt through formal arrangements in line with country-specific legislation. There were no material information security or data privacy incidents reported during the year under review.

The Group ICT Steering Committee is supported by the Group’s Information Security Architecture Committee, consisting of the information security officers of the Group and the operating divisions. The proceedings of this committee are informed by information security best practices sourced from Gartner, ISACA, CoBIT 5, ITIL, ISO27001 and the South African King IV™ Report on Corporate Governance.

Further details on the Group’s ICT investments are included in the Chief Executive Officer’s Review.

Support of external training institutions

The Group is committed to educational development within all three of its operating divisions and provides financial and other necessary support towards advancing healthcare education.

Respecting human rights

The Group is committed to conducting its business in a manner that respects and promotes the human rights and dignity of all those within its sphere of influence and avoids involvement in human rights abuses throughout its operations and relationships. This commitment is entrenched in the Group’s Code of Business Conduct and Ethics, which is further supported by the Group’s commitment to:

  • avoid and not contribute to any indirect adverse human rights impacts that are directly linked to the Group’s operations or services by its suppliers or other business relations;
  • respect patients’ rights, including but not limited to privacy, confidentiality, dignity, no discrimination, full information on health status and treatment, a second opinion, access to medical records, self-determination and participation, refusal of treatment and the right to complain;
  • value diversity and equal opportunities for all in the workplace; and
  • not tolerate any form of unfair discrimination, such as access to employment, career development, training or working conditions, based on gender, age, religion, nationality, race/ethnic origin, language, HIV/AIDS status, family status, disability, sexual orientation or other form of differentiation.

Modern slavery and human trafficking

The Mediclinic modern slavery and human trafficking statement, which is available on the Company website, sets out the steps Mediclinic has taken to prevent any form of modern slavery and human trafficking, which includes any direct form of forced labour or child labour in its business, or indirectly through its supply chain. During the year, Mediclinic has developed additional steps to strengthen its position in monitoring slavery and human trafficking activities, in order to ensure that it is not taking place in its supply chains.

Diversity

The Group values diversity and provides equal opportunities in the workplace, a matter which has received significant focus by the Nomination Committee during the year. The diversity representation (by race, gender and age) of the Group’s most senior governing bodies, as well as direct reports to members of those governing bodies, are provided in the Nomination Committee Report and the Corporate Governance Statement. Please also refer to the Sustainable Development Report for further information in this regard.

Broad-based black economic empowerment (“B-BBEE”) (South Africa)

Mediclinic Southern Africa forms an integral part of the political, social and economic community in South Africa and is committed to sustainable transformation as part of its business strategy. Mediclinic Southern Africa’s Executive Committee is responsible for ensuring that the appropriate focus is placed on the company’s commitment to the development and implementation of sustainable B-BBEE initiatives. Mediclinic Southern Africa has embarked on a rigorous and comprehensive review of its transformation strategy. A review of the current structure and content of diversity management interventions throughout the company is underway. This process will yield a more structured approach and an important outcome would be an engaged workforce wherein inclusivity is the ultimate goal.

Mediclinic Southern Africa’s new five-year employment equity plan was submitted to the Department of Labour in November 2017. The summarised employment equity report (EEA2) is included in the Sustainable Development Report.

The number of black employees increased year-on-year from 71.2% to 72.1% of total employees; and black management representation increased from 11% in 2006 to 29.4% in 2018 (2017: 27.7%), based on Mediclinic Southern Africa’s employment equity report referred to earlier.

Corporate social investment (“CSI”)

The Group contributes to the well-being of the communities within which it operates by investing in ongoing initiatives that address socio-economic problems or risks, and it has established itself as an integral member of these communities, enriching the lives of many communities throughout Southern Africa, Switzerland and the UAE.

The Group’s CSI activities are structured around the improvement of healthcare through training and education, sponsorships, donations, staff volunteerism, public private initiatives and joint ventures. Many of the Group’s initiatives relate to providing training and to the financial support of training. Due to the socio-economic conditions in Southern Africa, the majority of the Group’s CSI contributions are by Mediclinic Southern Africa.

The CSI spend per division is provided above.