Parliament orders Sh10b NHIF payout to rescue failing hospitals

SHA CEO Mercy Mwangangi when she appeared before the National Assembly Public Investments Committee on Social Services, Administration and Agriculture at Bunge Towers, Nairobi, on October 22, 2025. [Boniface Okendo, Standard]

Parliament has directed the settlement of up to Sh10 billion in outstanding National Health Insurance Fund (NHIF) debts to ease the financial strain on medical facilities and restore confidence in the transition to the Social Health Authority (SHA).

This directive is contained in a report by the National Assembly Health Committee, which assessed the utilisation of SHA funds since the scheme’s inception and examined the challenges faced by health facilities.

The committee found that several hospitals are struggling due to recurrent and systemic issues that go beyond individual institutions, pointing to significant operational and policy gaps in SHA implementation.

The committee, chaired by Seme MP Dr James Nyikal, has instructed the National Treasury and the Principal Secretary for Medical Services to urgently settle all verified NHIF arrears—or establish a clear, time-bound repayment plan within three months—to ease financial pressure on hospitals. “The National Treasury should invoke Article 223 of the Constitution to settle outstanding NHIF debts of up to Sh10 billion, ensuring financial stability and restoring confidence in the transition to SHA,” the committee noted.

Members conducted a fact-finding mission in Nairobi, Homa Bay, Laikipia and Nyeri counties to assess SHA fund utilisation, evaluate the impact on service delivery, including timeliness of reimbursements and fund management, and identify challenges in implementing Universal Health Coverage programmes.

According to the report, SHA reimbursements have been inconsistent, with some months recording no disbursements at all. A significant backlog of arrears inherited from the defunct NHIF also remains unsettled. The report highlights numerous cases of approved, but unpaid claims, further straining the financial stability of hospitals.

At Nyeri County Referral Hospital, the committee established that the facility lost over Sh16 million to a neighbouring private hospital due to payment processing errors. Since SHA’s inception, the hospital has submitted claims totalling Sh339.6 million, but has received only Sh197.1 million, representing 58 per cent of claims submitted. The hospital reported severe delays in reimbursements and noted that between February and May 2025, Sh56.1 million was mistakenly paid to another facility within Nyeri County, which had already spent Sh16.7 million before the error was discovered.

Ladnan Hospital, a 50-bed private facility in Pangani under the Metro Group PLC, submitted SHA claims worth Sh325.6 million and received Sh192.6 million, leaving Sh133 million outstanding. Mbagathi Hospital submitted claims of about Sh383 million and received Sh194 million, leaving Sh189 million pending, while its NHIF debt stands at Sh279.6 million.

Challenges identified include inadequate service coverage, with outpatient services not covered at Level 5 hospitals under SHIF, and the withdrawal of the Linda Mama programme, which has affected maternal and neonatal care. Hospitals also reported rejected claims and the lack of a transparent mechanism for resolving disputes. Many claim rejections were attributed to AI-driven processing systems operating with insufficient human oversight.

The committee further highlighted frequent SHA system downtimes—up to four times a month—disrupting hospital operations. Biometric verification difficulties were common, particularly for patients without national ID cards.

Oncology patients are especially disadvantaged, as essential diagnostic and follow-up tests are not covered. Given the costly, long-term nature of cancer care, this gap increases the risk of treatment interruption, poor outcomes, and inequitable access. Limits on outpatient laboratory tests and ICU packages remain impractical for prolonged care.