NAIROBI, Kenya – Auditor General Nancy Gathungu has exposed financial losses amounting to Sh678.4 million at Kenyatta National Hospital (KNH), blaming underfunded government-backed health schemes and stalled capital projects for eroding the country’s top referral facility’s resources.
In her report for the financial year ending June 2024, Gathungu revealed that KNH was forced to absorb huge deficits under the defunct National Health Insurance Fund (NHIF) and the Linda Mama free maternity programme, where reimbursements fall far short of the actual cost of care.
The bulk of the losses, Sh459.2 million, arose from NHIF claims — a 17 per cent increase from Sh379.1 million the previous year.
Losses linked to Linda Mama stood at Sh219.2 million, up 13 per cent from Sh190.1 million.
“The NHIF loss arises where the medical cost incurred by a patient is greater than the rebate reimbursed by the fund. In the circumstances, the hospital continues to bear the losses unless the NHIF reimbursable amounts are reviewed upwards,” the audit stated.
For Linda Mama, the government reimburses KNH a flat Sh17,500 per delivery, even in cases where neonatal or critical care costs exceed Sh100,000.
A 2017 revision allowed claims of Sh4,000 per day for complications, but the audit found the package still inadequate, leaving KNH with Sh21.9 million in uncovered costs last year.
Gathungu warned that without an urgent review of tariffs, KNH will remain trapped in a cycle of losses.
Stalled Projects Raise Red Flags
Beyond service contracts, the Auditor General questioned the handling of multi-billion shilling capital projects at KNH, citing cost overruns, delays, and procurement lapses.
The Paediatrics’ Emergency and Burns Management Centre, initially contracted at Sh2.99 billion, has seen costs balloon by Sh435 million to Sh3.4 billion due to delayed claim settlements that attracted interest charges.
Despite being partly funded by a Sh1.2 billion loan from development partners, the project, which was due for completion in August 2020, remains unfinished.
“The loan extension expired on July 31, 2024, without evidence of further renewal. In the circumstances, value for money on amounts spent could not be confirmed,” Gathungu reported.
Similarly, the Sh365.7 million Medical Oxygen Generating Plant, launched in May 2022 and due for completion by November of that year, remains incomplete more than two years later.
The contractor’s advance payment guarantee and performance bond expired in October 2023, contrary to procurement law.
Gathungu stressed that the lack of contract monitoring violates the Public Procurement and Asset Disposal Act, raising the risk that the hospital may lose public funds without securing delivery.
Broader Health Financing Concerns
The report comes at a time when Kenya’s health sector is under scrutiny following the transition from NHIF to the Social Health Authority (SHA).
Stakeholders have repeatedly warned that the reforms risk replicating the inefficiencies and underfunding that crippled NHIF, leaving hospitals overstretched.
KNH, as the country’s main referral facility, continues to shoulder the burden of underfunded programmes while struggling with incomplete infrastructure projects, a situation that Gathungu says undermines both service delivery and value for money for taxpayers.
