Kenyatta National Hospital, Kenya’s largest referral health facility, is effectively in critical condition after suffering significant financial losses due to inflated costs and poorly managed Linda Mama and National Health Insurance Fund (NHIF) programs. This is highlighted in the Auditor General’s report for the financial year ending June 30, 2023.
One notable incident involved a loss of Sh379.1 million after NHIF failed to fully reimburse the hospital for expenses incurred by patients. The report indicates that this loss occurred because the actual costs were much higher than the rebates provided based on existing medical service contracts between KNH and NHIF.
Despite this, KNH administrators continued to engage with NHIF and the Ministry of Health regarding unprofitable contracts from 2016 to 2022, as shown in their communications.
Although a renegotiated contract that took effect on July 1, 2022, expanded the number of claimable services, the annual losses remained significant, according to the report. It warns, “In this context, the hospital continues to incur high costs, leading to losses unless the reimbursable amounts are reviewed.”
On the Linda Mama program, KNH incurred a loss of Sh190.1 million. The Auditor General reports that the government reimburses KNH only Sh17,500 per delivery, despite receiving complicated maternal referrals for specialized care, including renal dialysis, critical care services, and neonatal care, which could cost over Sh100,000, resulting in further losses.
In July 2017, the package was enhanced to allow the hospital to claim a standard rebate rate of Sh4,000 per day in addition to the Sh17,500 for delivery complications. However, even this was insufficient to cover the losses.
The report states, “In this context, the hospital continues to bear the high costs of free maternity programs, negatively affecting overall performance.”
Additionally, the report raises concerns that KNH spent Sh23.7 billion against a budget of Sh21.1 billion, leading to an unapproved over-expenditure of Sh2.6 billion for the year in question. The hospital also inflated the cost of constructing the still incomplete Pediatrics Emergency and Burns Management Centre by Sh633 million.
Auditors reported that 678 patients owe Kenyatta National Hospital (KNH) a total of Sh75.6 million; however, there are no records available detailing inpatient data, invoice folio numbers, or guarantors. The report states, “In this context, the accuracy and recoverability of secured individual debtors amounting to Sh74,556,613 could not be confirmed.”
Regarding rental income, the report highlights that KNH has failed to collect Sh11.5 million for over 360 days. While most occupants of KNH housing are public servants, the report questions why the hospital has not initiated rent recovery through a checkoff system as mandated by its Housing Management Policy.
An additional 16 debtors owe a combined total of Sh21.1 million, representing 58 percent of total rent receivables. The report states, “In this context, the recoverability of uncollected rental income of Sh36,371,000 could not be confirmed.”
The report also raises concerns that the rents charged for KNH’s 968 staff houses have not been reviewed since 2001 to reflect market rates. If market rates were applied, the report estimates that KNH could collect an annual rent of Sh318 million, compared to the current Sh57.2 million, resulting in a revenue loss of Sh260.9 million.
This report emerges as KNH’s CEO, Evanson Kamuri, is under investigation for corruption. In May, the High Court froze Sh48.5 million and placed a caveat on six parcels of land owned by Kamuri for six months pending investigations into graft allegations by the Ethics and Anti-Corruption Commission (EACC).
Justice Esther Maina granted the EACC’s request to freeze the funds held in seven accounts at HFC Bank, National Bank, and Standard Chartered Bank while probing allegations of corruption and economic crimes involving Sh634,465,000.
Three accounts at HFC Bank held a total of Sh41 million, distributed as follows: Sh10.5 million in one account, Sh18 million in another, and Sh12.5 million in the third. His two accounts at National Bank contained Sh1.2 million and Sh1.9 million, while one account at Standard Chartered had Sh4 million.
