NAIROBI, Kenya, Mar 4 – The new Social Health Insurance Fund faces imminent collapse in the next 12 months due to severe underfunding and flawed funding structure,private hospitals have warned.

Appearing before the National Assembly Health Committee, Kenya Association of Private Hospital Chairperson Erick Musau warned that only 4 million Kenyans were contributing to the SHIF kitty fund with the majority being on salaries.

Musau pointed out with no framework on ensuring the non-salaried employees who are the majority, contribute to the fund then the sustainability of the fund is in jeopardy.

“We do not feel that sufficient safe guards have been put up to ensure that people continuously contribute to this kitty and not just when they need services, and if this trend goes on like this, we do not see this fund surviving beyond 12 months,” he noted.

Kenya Healthcare Federation Chairperson Kanyenje Gakombe highlighted that 80 percent of those seeking treatment under SHIF register and pay at the point of need with no sufficient framework to compel them to pay premiums.

“We must put a law to ensure that the non-salaried also pay their premiums, we need a way to collect money for medical, leaving to individuals to decide whether they will pay or not, will not work,” Gakombe stated.

The Kenya Healthcare Federation Chairperson pushed for the immediate disbursement of Sh 30 Million owed to private and faith-based hospitals defending their move to suspend admission of patients using the fund.

“We want medical insurance to succeed, we have worked to make sure that SHA succeeds, our stopping or services is an act of desperation, our willingness to give Kenyans services should not be doubted, but our ability to do is the problem because we need funding.” Gakombe said.

Reimbursement rates

The Rural Private Hospitals Association (RUPHA) raised alarm over the drastic reduction in healthcare reimbursement rates and budgetary shortfalls under Kenya’s new Primary Healthcare (PHC) funding model, warning of potential service disruptions and mass closures of facilities.

RUPHA Chairperson Brian Lishenga emphasized that the current allocation of 900 shillings per person annually is significantly lower than the past National Health Insurance Fund (NHIF) reimbursement models.

Previously, level 2 and 3 facilities received 1,000 shillings per person per visit, while level 4, 5, and 6 hospitals were reimbursed at 1,400 shillings per person per visit.

Lishenga stated even  with these rates, healthcare providers struggled to stay financially afloat.

“This new funding level is unsustainable. Providers were already struggling under NHIF, and now we are expected to operate with even less,” Lishenga told MPs.

The PHC Fund, meant to ensure universal access to healthcare, currently serves 20 million registered Kenyans.

However, RUPHA estimates that at least 18 billion shillings are required to sustain services for the next 12 months, yet the government has only allocated 4.2 billion shillingsa shortfall of nearly 14 billion shillings.

“This fund is non-contributory. The government must allocate sufficient resources because 91% of health providers are at the primary level, where the majority of Kenyans seek care,” Lishenga stated.

Debt owed

Adding to the financial strain, providers have not received payments since November 2024. Lishenga warned that delayed reimbursements have left hospitals unable to pay salaries, forcing staff layoffs and the closure of critical units such as dental clinics, theaters, and diagnostic services.

“If the last time providers were paid was November, and we are now in March, how do you expect them to continue treating patients?” he questioned.

Under the new Global Budget Capitation Model, funds are allocated based on a fixed population estimate per county.

RUPHA argues that this structure creates incentives for facilities to minimize patient visits to maximize earnings, potentially leading to delayed treatment and poor health outcomes.

“The fewer patients a facility sees, the more they save. This is a fundamental flaw in the design that could negatively impact patients with chronic illnesses,” Lishenga warned.

Furthermore, the shift from sub-county-based primary care networks (PCNs) to county-wide networks has raised concerns over governance and patient access. While the expansion of catchment areas allows patients greater choice, it is not aligned with the law, which still mandates PCNs at the sub-county level.