KENYA:MPs poke holes in unhealthy KNH-NHIF deal amid Sh320m loss

September 2019 theStar; Lawmakers have picked holes in an unhealthful contractual agreement between Kenyatta National Hospital and insurer NHIF that cost the national referral facility millions of shillings in losses.

The losses were first flagged at Sh323 million in 2013, sparking the interest of the Public Investments Committee during a review of the KNH accounts yesterday.

Audit reports for the successive years show that the figure has dramatically gone up to Sh347 million in 2014, Sh392 million in 2015, and Sh411 million in 2016.

In 2017, Auditor General Edward Ouko flagged the loss at Sh377 million, while the audit for 2018 shows it dropped to Sh268 million.

The PIC, chaired by Mvita MP Abdulswamad Nassir, took KNH acting CEO Evanson Kamuri to task, demanding he explain the losses and why they are pervasive.

Further questions were on why the terms of the contract signed in 2008 have not changed despite continued losses. The hospital entered into the contract to treat NHIF members at a rebate rate of Sh2,400 for inpatient care per day.

In August 2016, the rebates were revised to Sh4,000, but concerns remain on why the hospital has failed to explain how it would recover the losses.

For his part, however, Kamuri told MPs the hospital has engaged NHIF for them to consider reviewing the reimbursable rates to avert the losses. He said management sought to discontinue the loss-making contracts, but the hospital did not discontinue the services to NHIF members.

Kamuri added that in May 2014 the Ministry of Health directed KNH to continue the services on the same terms.

“Consequently, the engagement resulted in the signing of a new contract in March 2019 which enhanced the number of claimable services,” he said.

The changes resulted in the rebate for inpatient rising to Sh4,000, including rebates for surgical packages and radiology services. The rates for CT scan, MRI, and Ultrasound are now charged Sh8,000, Sh15,000, and Sh3,000 respectively.

Dialysis is charged Sh9,500, while chemotherapy and radiotherapy services are reimbursed at a cost approved by NHIF.

But MPs said KNH must strive to recover the losses, terming such a situation costly to Kenyans yearning for better healthcare services.

“If the costs are not recoverable, then this can be equally a pointer that KNH’s costs of operation are very high. Our fear is that there is no sign the losses would stop much as there is a gradual reduction,” Nassir said.

Mandera East MP Omar Mohamed said rebates cannot be considered as losses being a cover for costs on the side of KNH.

North Mugirango MP Joash Nyamoko asked, “What are the chances the figures will change soon? How do you fill the gap now that patients don’t pay?” 

But Kamuri said the hospital doesn’t ask the patients to pay as most of them are unable to meet the costs on their own.

Shinyalu MP Justus Kizito said that owing to the perennial losses, the hospital is under financial threat, a situation he said must not be allowed to continue.

“Suppliers will start demanding payments for material consumed in the course of treating patients at the facility, especially those covered by NHIF,” he said.

Also raised in the committee is a loan that was borrowed from Spain for equipment delivered to KNH.

Much as the contract was signed by the National Treasury, KNH has kept reporting the loan as a debt in its books of accounts. During the committee session yesterday, it was revealed that the Treasury has begun repaying the loan, having negotiated the same. But the MPs said the plan is risky to KNH.

Kamuri noted that no subsidiary agreement existed between the hospital and the Spanish government to allow KNH to service the loan.

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