
MATERIALITY ASSESSMENT
Mediclinic has many economic, social and environmental impacts through, among other things, the generation and distribution of value, the creation of employment opportunities, the fair and competitive remuneration of employees, the training and development of employees, black economic empowerment in South Africa, corporate social investment and its use of natural resources.
The Company’s materiality assessment is used to focus its reporting on the most significant sustainable development impacts, being those that directly affect the Group’s ability to create value, reflecting the Group’s impacts and legitimate expectations of its stakeholders. The guidance on determining materiality contained in the GRI G4 Sustainability Reporting Guidelines and the International Integrated Reporting Framework were used during the materiality assessment.
Mediclinic acknowledges that it is dependent on various capitals (financial, manufactured, intellectual, human, social and relationship, and natural) in order to create value, which are affected by the Group’s activities. The results of the materiality assessment were therefore categorised according to these capitals, as illustrated in
Five material sustainability issues (
This approach enables external stakeholders to have access to all relevant information with regard to the Group’s sustainable development performance and also meets the JSE SRI Index requirement that all information must be in the public domain for purposes of the review process.
MATERIAL ISSUES: PERFORMANCE HIGHLIGHTS
A few highlights of the Group’s performance against its material sustainability issues for the period under review are summarised in

Material issue:
PROVIDE QUALITY HEALTHCARE SERVICES 1
Potential risks considered in impact and materiality assessment |
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Measures/KPIs | Performance highlights | More information | ||||||||||||||||||||||||||||||||||||||||||
Patient safety, quality care and clinical outcomes, focusing on:
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Group
During 2014 the platforms continued to strengthen its clinical leadership and management structures, made significant progress in infection prevention and control, and focused on establishing a more integrated approach to patient care. Multi-disciplinary clinical committees at hospital level are established throughout the Group that drive quality and safety and promote cooperation between doctors, nursing staff and management, and are being developed further. Focused clinical audits are used at most hospitals throughout the Group. Clinical outcomes are benchmarked throughout the Group through participation in external initiatives such as the Vermont Oxford Network aimed at measuring and improving the quality of care in neonatal intensive care units; the Adult Cardio-thoracic Database aimed at measuring and improving the clinical outcomes of cardio-thoracic surgery; and APACHE III-j, a hospital mortality prediction methodology for adult intensive care patients, used to evaluate the quality of care in this complex setting. Information security policy and controls are in place throughout the Group, as further dealt with in the Corporate Governance Report. Southern Africa
Mediclinic Southern Africa has further emphasised its commitment to clinical excellence by appointing clinical quality specialists to develop and implement strategies in the specialised units. Mediclinic Southern Africa maintains an effective infection prevention and control programme centred on a comprehensive electronic surveillance system. The services of independent microbiologists and infection prevention and control specialists are regularly utilised in order to ensure continuous improvements in the programme. Switzerland The rollout of the electronic patient record is now covering more than 30% of the inpatient cases and should be completed by 2017. UAE Development of key performance indicators (KPIs) that will be included in the annual doctors’ performance review process at Mediclinic Middle East. Mediclinic Middle East standardised its CIS, a component of the Hospital Information System (“HIS”), across all its hospitals and multi-disciplinary outpatient clinics. The HIS is now fully implemented in Dubai and has a unified medical record number that allows doctors to access patient records from any one of the units. The system is also fully integrated with the Laboratory Information System and the Radiology Information System, allowing doctors to view results and images as part of the patient’s electronic medical record. Doctors are regularly assessed by way of a clinical performance management system in which different key clinical performance indicators are evaluated. Nursing staff is evaluated twice a year and succession planning for key nursing staff is performed on an ongoing basis. |
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Patient satisfaction | Group
In Southern Africa, the Patient Journey programme, designed to further enhance the patient experience of the group’s hospitals, is progressing well, with the initial six major projects completed. Initiatives currently under way include the improved inclusion of patients and families in the care process, reviewing the food service offering in hospitals, a focus on noise reduction in hospitals and placing an accent on the critical element of medication counselling. |
Chief Executive Officer’s Report Stakeholder engagement (patients and doctors) Quality of care and facilities: Clinical quality; and Patient satisfaction |
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Provide and maintain high-quality hospital infrastructure (facilities and equipment), focusing on:
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Group
The Group strives to provide the best healthcare facilities and technology affordable and available in the different countries in which it operates. The maintenance systems are risk orientated, aimed at patient safety and ensure the provision of service excellence that is respected and relied upon. The planned maintenance systems and related procedures are constantly being evaluated to ensure that patient safety is paramount. |
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Cost of healthcare | Group
Southern Africa Mediclinic Southern Africa continues to participate in the collaborative market research done by the CMS Industry Technical Advisory Panel, with a key project being the analysis of drivers of inflation in medical scheme contributions. Switzerland UAE |
Access to and affordability of healthcare | ||||||||||||||||||||||||||||||||||||||||||
Accreditation | Southern Africa Switzerland Fourteen Hirslanden hospitals and the Hirslanden Corporate Office were self-assessed against the EFQM (European Foundation for Quality Management) Excellence Model. Fifteen Hirslanden hospitals and the Hirslanden Corporate Office are ISO 9001:2008 (quality management) certified. UAE The pathology laboratories of both Mediclinic Middle East hospitals are ISO 15189:2009 certified. All five clinics with in-house laboratories were also recertified during the year. Mediclinic City Hospital’s pathology laboratory is accredited by the College of American Pathologists (CAP). This is part of the biannual accreditation cycle. Mediclinic City Hospital is recognised as an IBCLC (International Board Certified Lactation Consultants) Care Award facility in recognition of its lactation programme and breastfeeding support. |
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Outlook/plans going forward | ||||||||||||||||||||||||||||||||||||||||||||
Group The development of clinical leadership, accountability and accompanying organisational structures will continue to receive attention. The refinement of patient care standards and policies, and the assessment of health technology, will in future be coordinated centrally by Mediclinic International through pooling of skills and insight from all three platforms. Each of the three platforms is busy developing and refining its approach to clinical information systems and electronic patient records for improved clinical care process support. New service offerings and integrated care models to improve performance are also being investigated and implemented. As the availability of accurate clinical information forms the foundation of clinical performance measurement and improvement, Mediclinic embarked on an information management strategy in order to improve the integrity of its clinical information. This will enable the development of a wider range of clinical performance indicators during the next few years, and will significantly enhance clinical cost analytics and accompanying cost-efficiency initiatives. Southern Africa Patient satisfaction performance goals will be set for the next year and benchmarked against the Press Ganey international database consisting of over 1 900 participating hospitals. As part of the group’s Patient Journey strategy, further workshops are planned with the hospital management teams on Leading the Patient Experience and with all staff on Managing the Patient Experience. Switzerland Hirslanden Clinique La Colline to be certified against the ISO 9001:2008 (quality management) standards There is a new European norm, based on ISO 9001, dedicated for healthcare institutions (EN 15224), which integrates additional elements such as patient safety and patient orientation. An external audit regarding EN 15224 will be piloted in one of the hospitals of the group. UAE
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Material issue:
ADDRESS SHORTAGE OF HEALTHCARE PRACTITIONERS 2
Potential risks considered in impact and materiality assessment |
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Measures/KPIs | Performance highlights | More information |
Employee recruitment and retention | Group The recruitment approach is consistent with promoting the Group as an employer of choice. Sound performance management procedures are in place to identify areas for improvement and training needs, recognising good performance and promoting opportunities for career development and contributing to a contented workforce. Southern Africa Various initiatives between Mediclinic Southern Africa and local and national government authorities to collaborate on training needs. Foreign recruitment drives for nurses from India to alleviate critical registered nurse shortage in Southern Africa. These nurses are now placed in 23 Mediclinic Southern Africa hospitals across the country. Switzerland Hirslanden introduced Centres of Expertise for specialised employer branding and employer shared services. Hirslanden’s absence management enables the group to control the attendance rate of employees and to recognise problem situations promptly. Hirslanden implemented an exit monitoring process in 2014 in support of the group’s retention strategy. UAE Physician information sessions are held at Mediclinic Middle East demonstrating new projects and opportunities to join the group’s medical team. Mediclinic Middle East successfully rolled out an e-Learning initiative to upskill the staff. |
Labour relations and working conditions |
Development and training of staff to maintain and improve quality service delivery | Group The average spending on employee training expressed as a percentage of payroll was 3.0% (2014: 3.3%) by Mediclinic Southern Africa, 5.0% (2014: 5.0%) by Hirslanden and 0.2% (2014: 0.4%) by Mediclinic Middle East. Performance reviews to develop staff and identify training needs were conducted with all Hirslanden and Mediclinic Middle East employees and with 99.6% of Mediclinic Southern Africa employees during the year. Southern Africa Three of the group’s six Learning Centres were expanded during the year to enable an increase in learner numbers. The results of a KPI system to measure Mediclinic Southern Africa’s training performance in the group’s Learning Centres remain good, with high learner success rates. Mediclinic Southern Africa’s Management Development Programme continues to be successful and focuses on developing employees on an accelerated learning path with exposure to the business, industry and the responsibilities of a manager in a structured manner. The programme was registered by the Department of Higher Education and Training and the first 11 learners successfully completed the registered Advanced Diploma in Health Services Management and Leadership in 2014. Two of these learners were promoted into managerial positions within the group and one of the current second year learners was also recently promoted into a hospital manager position. Mediclinic Southern Africa launched a Leadership Academy in 2013 and, to date, 654 management and training employees attended this programme, which focuses on leadership based on the corporate culture and values. Mediclinic Durbanville has been accredited by the University of Stellenbosch as a training centre for internal medicine medical student training, which project was piloted in 2014. The project was successful and will be extended to other hospital localities. Public forums to address skills shortages are attended on a regular basis and good relations are maintained with relevant legislative bodies. Switzerland At Hirslanden, 977 (2014: 943) apprentice employees received formal training (federal certificate, higher college, college or graduate students) across 30 professions, of whom 832 (2014: 816) students were healthcare professionals and 145 (2014: 113) junior doctors. UAE In addition to the in-house training, the e-Learning programme was launched in February 2015, providing 1 100 licences to staff and offering a mix of 16 customer service and leadership courses. |
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Nurse training | Southern Africa During the 2014 academic year, 572 (2013: 451) students completed basic nursing courses; 79 (2013: 97) students completed post-basic nursing courses; 808 (2013: 804) learners completed other Mediclinic Southern Africa courses in various disciplines. Mediclinic continues to train Operating Department Assistants for the Western Cape Department of Health. In March 2015, a “train the trainer” workshop was organised by Mediclinic to train nurses in cardiotocograph interpretation and to equip them to train others. Delegates included Mediclinic staff as well as delegates from various Western Cape Department of Health hospitals. The workshop was run by an expert from New Jersey, USA. Mediclinic plans to host more workshops in collaboration with the Department of Health in future. Mediclinic Southern Africa provides free training to Grade 12 school leavers to obtain either a nursing qualification or a qualification as an operating department assistant. The group plans to expand the programme offering to include training to become emergency care technicians. Switzerland UAE |
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Support of external training institutions | Southern Africa Bursaries and funding towards higher education, mainly for the group’s employees, to the value of R1.4m (2014: R1.8m) were provided during the year. Switzerland UAE |
Supporting academic institutions |
Remuneration and recognition of staff | Group To encourage a performance-driven organisation, the Group rewards employees for achieving strategic objectives as well as individual personal performance targets. During the year, the Group introduced a Reward Centre of Expertise, specialising in the design and delivery of global reward initiatives. The Group’s management remuneration structures consist of a fixed and a variable component:
Southern Africa All Mediclinic Southern Africa employees, up to and including first line management, participate in an employee ownership scheme through the Mpilo trusts. Employees are recognised for tenure of 5, 10 and 25 years’ service with both monetary and non-monetary awards. Switzerland UAE During the year, Mediclinic Middle East managed to appoint several senior positions internally, demonstrating to staff the potential to grow internally as part of the succession planning strategy. |
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Employee health and safety | Southern Africa Switzerland UAE |
Health and safety at work |
Employee satisfaction | Group Southern Africa Switzerland UAE |
Employee composition and turnover rates |
Outlook/plans going forward | ||
Group Southern Africa Mediclinic Southern Africa plans to increase learner numbers by approximately 600 learners over the next five years. The Mediclinic Learning Centre Cape Region plans to implement training of emergency medical care technicians in 2016. The commissioning of a seventh Learning Centre in Kimberley, as well as a satellite campus in Pietermaritzburg for operating department assistant training, is planned for the year ahead, subject to approval by the relevant legislative bodies. Collaboration with the University of KwaZulu-Natal to train specialist nurses in Pietermaritzburg is planned. A project that will commence during the next year will investigate the possibilities for addressing shortages in Namibia through training and/or bursaries. Funding of training through collaboration with other institutions to address the training needs in remote areas is being investigated. Switzerland Furthermore, Hirslanden offers its employees modern working conditions, including the possibility of professional training. UAE |
Material issue:
CREATING AND SUSTAINING SHAREHOLDER VALUE 3
Potential risks considered in impact and materiality assessment |
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Measures/KPIs | Performance highlights | More information |
Acceptable shareholder returns | The total dividend per share for the period under review is The Group’s dividend policy reflects the underlying earnings and growth of the business while retaining sufficient capital to fund ongoing operations and to invest in the Company’s long-term growth. The Company currently targets a payout ratio of between 25% and 30% of normalised headline earnings per share. The Company’s market capitalisation has increased from R170m at listing on the JSE in 1986 to R105 891m (2014: R61 881m) at year end. The Group’s normalised headline earnings increased by 13% to R3 443m (2014: R3 052m) and basic normalised headline earnings per ordinary share increased by 9% to 408.2 cents |
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Growing the business | Group normalised revenue increased by 16% to R35 238m (2014: R30 495m) for the period under review. Normalised EBITDA is 11% higher at R7 179m (2014: R6 467m). The Group continues to make significant investments to grow the capacity of its footprint at each of the operating platforms, supported by the successful capital raising of R3.1bn through an accelerated bookbuild in June 2014. During the year, the Group continued to invest in its existing platforms:
The development of the North Wing at Mediclinic City Hospital in Dubai is progressing well and is expected to be commissioned in the 2016/17 financial year. In addition, Mediclinic Middle East has started with the planning and development of a third hospital, on the southern side of Dubai, with an estimated opening date of mid-2018. |
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Profitability | The Group’s normalised EBITDA margin decreased from 21.2% in 2014 to 20.4% at year end. The EBITDA margins of the Group’s platforms were 21.3% (2014: 21.6%) for Mediclinic Southern Africa, 19.4% (2014: 20.8%) for Hirslanden and 21.8% (2014: 22.0%) for Mediclinic Middle East. |
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Asset efficiency | Property, equipment and vehicles increased from R49 597m at 31 March 2014 to R53 776m at year end, and intangible assets increased from R9 210m at 31 March 2014 to R11 565m at year end. These increases are mainly as a result of additions as well as the change in the closing ZAR/CHF and the ZAR/AED exchange rates. The Group’s cash flow continued to be strong. The Group converted 109% (2014: 98%) of normalised EBITDA into cash generated from operations. Cash and cash equivalents increased from R3 521m at 31 March 2014 to R4 779m at year end. Mediclinic has an asset efficiency ratio (revenue to total assets) |
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Outlook/plans going forward | ||
Mediclinic continues to invest in growth opportunities within its existing operating platforms. In the UAE, an opportunity for a new hospital on the south side of Dubai has been identified as well as opportunities for two additional clinics. These have undergone a strict process of due diligence to ensure that they are sustainable and will deliver shareholder value going forward. |
Material issue:
RESPONSIBLE USE OF NATURAL RESOURCES 4
Potential risks considered in impact and materiality assessment |
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Measures/KPIs | Performance highlights | More information |
Effective environmental management system to monitor and minimise impact | Group CDP Global A List ranking in the 2014 Climate Performance Leadership Index. Mediclinic is the only and first hospital group in the world to receive this ranking. Southern Africa Switzerland UAE |
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Effluent and hazardous waste management | Southern Africa Switzerland UAE |
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Energy efficiency | Southern Africa
Excluding these improvements, the total CO2 emissions decreased from 105 kg to 102 kg per bed day. Switzerland Klinik Hirslanden, Hirslanden Klinik Im Park and Hirslanden Klinik Stephanshorn are recognised as CO2-reduced businesses by the Swiss Energy Agency for the Economy on behalf of the Swiss Federal Office of Energy. This achievement recognises the contracted commitment to reduce CO2 emissions within operations. Since January 2014, the electricity supply of the entire Hirslanden group (all 16 hospitals and the Corporate Office) was from 100% sustainable electricity generation mainly from hydropower plants. One of the group’s hospitals, Hirslanden Klinik Belair, has gone further by switching its entire electricity consumption from January 2014 to CleanSolution StarPremium, a green electricity provider, which is certified to the most stringent specifications for the generation of green electricity in the world (www.naturemade.ch). The energy is free from nuclear power and CO2. UAE |
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Outlook/plans going forward | ||
Southern Africa Switzerland UAE |
Material issue:
GOVERNANCE AND CORPORATE SOCIAL RESPONSIBILITY 5
Potential risks considered in impact and materiality assessment |
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Ethics | Group Southern Africa Switzerland UAE |
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Effective risk management | Group During the year, Mediclinic Middle East appointed a Safety and Risk Officer to consolidate and centralise all actions related to risk within the business. |
Risk Management Report | ||||||||||||||||||||||||||
Compliance with laws and regulations | Group Good progress was made to define and integrate relevant laws and potential risks in the risk registers of the various platforms and departments. As in previous years, there were no incidents of material non-compliance with any laws, regulations, accepted standards or codes applicable to the Group or fines against the Group during the period under review. |
Corporate Governance Report | ||||||||||||||||||||||||||
BBBEE (in South Africa) | Southern Africa The number of black employees increased year on year from 67.2% to 69.1% of total employees. Black management representation increased from 11% in 2006 to 25.8% at year end. Diversity management interventions are continuing through workshops and presentations at all localities throughout the group. |
Broad-based black economic empowerment | ||||||||||||||||||||||||||
Corporate social investment (“CSI”) | Group Various health awareness campaigns are conducted throughout the Group. Southern Africa
Switzerland On a group basis, Hirslanden launched a new CSI initiative under the name Donation instead of a gift and allocated CHF50 000 to an orthopaedic development help foundation that provides medical support in Vietnam. Hirslanden hospitals partnered with various local and international organisations and foundations such as the “One chance, one heart” foundation (www.chancecoeur.ch) in Lausanne that coordinates the medical and surgical treatment of young patients suffering from heart disease in developing countries. UAE
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Outlook/plans going forward | ||||||||||||||||||||||||||||
Hirslanden plans to introduce an independently operated Ethics Line, in line with the practice at the rest of the Group, during the year ahead. The implementation of more standardised guidelines and a process to expand the monitoring of compliance with laws is planned, which will include raising employees’ awareness of their responsibilities within Hirslanden. Mediclinic Middle East is entering the second year of a three-year arrangement with Al Jalila Foundation |