SHA woes: Unpaid claims cripple hospitals, push patients to pay cash

Health CS Aden Duale addresses MPs during their retreat in Naivasha. [Antony Gitonga, Standard]

At a private hospital on the outskirts of Nairobi, empty beds, drawn curtains and an unsettling silence define the female ward.

On a normal day, the ward would be a beehive of activity, with mothers receiving post-delivery care, babies being breastfed, and relatives anxiously waiting along the corridors to visit their loved ones.

But today, the doors are locked. The maternity wing has been shut down, with at least seven nurses who used to man it were laid off.

Suppliers have stopped offering drugs and medical commodities on credit.

Sadly, essential laboratory tests are only conducted after cash is paid. Screening for prostate and cervical cancer, costing up to Sh12,000, has been suspended

The dental unit at the facility is closed following downsizing of doctors and other health workers. Initially run by two consultant dentists, the unit now serves only cash-paying patients.

The financial strain continues to cripple operations, thanks to mounting unpaid Social Health Authority (SHA) claims.

The level four hospital is owed Sh17 million by SHA, in addition to Sh29 million inherited from the defunct National Health Insurance Fund (NHIF).

Smoothly run

Of the total debt, SHA disbursed a sum of Sh1.09 million to the facility last week.

“SHA’s reimbursement model is unpredictable, inadequate and unsustainable, making it hard to smoothly run the facility.

‘‘If you compare what we bill and what we are eventually paid, it ranges between five and nine per cent of what we expect. That is nowhere near enough to run a health facility,” regrets the owner.

He notes: “We cannot pay salaries, rent, procure medical consumables or maintain basic hospital standards.

‘‘You cannot keep running tests that are never reimbursed. The hospital is now only offering services that make economic sense.”

The struggle is compounded by the rejection of SHA claims, often after services have already been approved and rendered. At least claims by the facility valued at Sh2.2 million have been rejected.

“When SHA approves a procedure, we go ahead and treat a patient. The patient happily goes home. But later, the same claim is rejected. At that point, the hospital has completely lost the money,” regrets the owner.

“If SHA rejected procedures upfront, patients would know what is not covered and make informed decisions. Instead, hospitals are left carrying the burden,” adds the owner of the facility.

Nationally, Sh11 billion claims have been rejected, money Health Cabinet Secretary Aden Duale maintains shall not be paid, referring the claims as fraudulent.

Ironically, the technology system creates the illusion that SHA is “working” for patients, as hospitals are directed to offer care even when payment is uncertain.

Complaints desk

Even as hospitals raise concerns on rejected claims and inefficiencies with the SHA system, there is no complaints desk, like NHIF structures, as the SHA system is technology-oriented, limiting human interactions.

Health care providers are forced to visit SHA headquarters for help, as county operation offices are yet to be operationalised.

The situation at the hospital mirrors a growing national crisis affecting public, private and faith-based hospitals.

Investigations by The Saturday Standard team across several counties show hospitals grappling with unpaid SHA claims running into billions of shillings.

Some are operating without credit, unable to restock medical supplies or pay staff, while others have shut down units or closed entirely.

Collectively, hospitals are owed more than Sh76 billion, including Sh33 billion liability from defunct NHIF and more than Sh43 billion under SHA.

St Mary’s Hospital in Mumias is among facilities that was hard hit by non-payment of claims, forcing it to shut down.

The level five facility administrator Sister Mary Janet Nduku, told The Saturday Standard that the hospital has been operating since 1932, until in June last year, after getting into a financial crisis.

Services were operationalised last week after intervention from the top church management.

“We have begun offering outpatient and inpatient services,” Nduku said.

The facility is owed unpaid claims valued at Sh180 million, by both SHA and the defunct NHIF.

With limited cash flow, Nduku pleaded with SHA management to speed payments that are under review. But even as the facility re-opens, she regretted that some services are not offered under SHA package, and patients will be required to pay out of pocket.

“Running the facility is expensive, we therefore plead with patients to understand this. For example, electricity needs to be paid, and employees should be paid,” says the nurse.

The Saturday Standard met Leonida Chausiku Sakwa, a hypertension and diabetes patient receiving care at the facility.

“I have been attending specialised clinic at this hospital for the past 20 years.

‘‘I am usually tested, and given drugs that are never provided in nearby public hospitals,” says the patient.

She adds, “I am happy because my sugar level has been stabilised. Having the facility re-opened will also ease my burden of buying drugs from chemists.”

In Mombasa, a private hospital suspended its maternity services two months ago due to unpaid claims.

“Delivering a mother takes time, staff and resources,” the facility proprietor said.

“Mothers arrive in advanced labour without money, yet you cannot turn them away because it is risk to their lives and babies”.

The facility charges Sh8,000 for a normal delivery and previously recorded at least 10 deliveries a month.

“In December and January, I did not have a delivery here. During the last antenatal clinic day, I directed mothers to a nearby facility,” the owner said.

The impact goes beyond maternity care.

“I cannot stock medication as much as I would wish. The laboratory lacks equipment, and staff are demotivated because salaries have not been paid for months,” the owner added.

NHIF liability

The hospital is owed Sh9 million, of which Sh4 million NHIF liability and Sh5 million by SHA.

Additionally, the hospital has claims worth Sh2.4 million that have been rejected.

Last week, SHA paid Sh41,000, whereas last year it received Sh800,000, staggered across the year.

The hospital has since failed to renew laboratory and pharmacy licences.

“We are now almost seven months without pay. You cannot plan anything when you do not know how much, when or whether you will be paid,” the owner of the facility said.

Due to financial pressure, the hospital has been forced to lay off 13 health workers, leaving only two nurses and two clinical officers.

With limited options, hospital administrators are now forced to visit SHA headquarters in Nairobi to seek explanations and resolutions often without success.

The proprietor regrets that claims were rejected without an explanation.

“Claims move from ‘under review’ to ‘rejected’ without communication.

‘‘SHA has one major problem, they do not communicate,” she observes.

With lack of knowledge on requirements to facilitate claims payment, the facility owner says hospitals continued submitting documentation required under NHIF such as discharge summaries and birth notifications only for SHA to introduce new claim forms months later.

By then, many claims had already been rejected.

Amid increased rejection of claims, SHA Chief Executive Officer Mercy Mwangangi organised an online training to help facility make claims.

Private facilities

But the training according to providers was sporadic, often conducted via WhatsApp, which many facilities struggled to follow.

The crisis is not confined to private facilities.

At Mbagathi Hospital’s Neonatal Intensive Care Unit (NICU), medical commodities are being rationed due to financial strain.

“The facility is unable to afford basic items like catheters and gloves because of unpaid SHA claims. This has also limited admissions,” said an insider.

The NICU, a labour-intensive unit, has also been affected by staff layoffs. This is despite intensive workload.

Elsewhere at Mutuini Hospital, in Nairobi, health services offered to patients are limited because of a financial crunch.

The hospital is owed Sh96 million, by both SHA and defunct NHIF. It received Sh1.5 million last week.

“What is Sh1.5 million compared to what is owed?” poses the facility CEO, Dr Martin Wekesa.

Patients with chronic conditions are among the hardest hit, as they are forced to pay for tests and buy medicine.

“If a patient requires drugs that are not available, they have to buy them outside the facility.

‘‘Those who need regular medication suffer the most,” says Wekesa.

He adds, “Suppliers are pulling back, and sometimes management is forced to pay half salaries just to keep staff motivated.”

The facility serves more than 1,000 outpatients, drawn from Nairobi, Kiambu and Kajiado counties, including refugees, street children and other vulnerable groups.

Referral hospitals like Kenyatta National Hospital and Moi Teaching and Referral Hospital, are not spared. Each of the facilities is owned more than Sh3 billion.

Despite mounting complaints, Health CS Aden Duale has defended SHA, insisting the transition from NHIF is delivering gains.

Addressing Members of Parliament during a retreat in Naivasha, Duale said 29 million Kenyans have registered under SHA, with Sh130 billion collected and Sh93.3 billion disbursed to healthcare providers.

Additionally, he said SHA has achieved an average 73 per cent claims settlement rate, insisting money is flowing to hospitals.

“Contrary to the inefficiencies of the past, we are now processing and settling all verified and validated claims,” Duale told MPs.

Health care costs 

According to Rural and Urban Private Hospitals Association of Kenya (RUPHA), non-payment of claims has increased out-of-pocket expenditure, exposing patients to catastrophic health care costs contrary to Kenya Kwanza administration’s Universal Healthcare Coverage (UHC) programme.

RUPHA data show that only 27 per cent of hospitals received payment in January, with some facilities last paid in October last year, while others have not received funds since April.

“We are in a crisis, and we need decisions, not rhetoric. If we are having increased collections according to Duale, this must translate into financing hospitals so that Kenyans can access care without being pushed into poverty,” observes RUPHA chairperson, Dr Brian Lishenga.

The association has dared the Duale to list hospitals and individuals involved in the Sh11 billion fraud. 

“If indeed Sh11 billion was lost, we demand immediate prosecution of SHA officials who authorised the payments and arrests of hospital owners and CEOs involved,” says the official.

He adds, “If the ministry lost Sh11 billion in nine months, then the ministry leadership and SHA must step aside. They should be the first to take responsibility.”

Last year, the ministry cited 188 gazetted facilities allegedly involved in fraud, initially estimating the loss at Sh10.2 billion, only to have it revised to Sh11 billion.

“On behalf of Kenyans, we are demanding concrete efforts to recover the money.

‘‘If there are none, then the drama must stop and hospitals must be paid, so that patients receive care” adds Lishenga.

UHC talk

Hospitals and patients maintains that even with hyped UHC talk, officials and government are detached from reality facing hospitals and service consumers.

“At the end of the day, UHC is delivered by healthcare providers. If they are not paid, facilities close and people are denied care,” says Kenya Medical Association president, Simon Kigondu.

Dr Kigondu has criticised SHA’s claims processing system, saying it is overly automated and hostile to health care providers.

“You provide a service, submit a claim, and it is rejected by the system.

‘‘When you challenge it, the first response is that you are fraudulent, without an explanation.”

Rejected claims, according to him result in permanent losses for hospitals.

“The system is almost designed to make claims fail.

‘‘Money is easily collected, but excuses arise when it is time to pay claims,” alleged the KMA boss, warning that failure to settle both NHIF debts and SHA arrears has destabilised the healthcare ecosystem. 

“Suppliers go unpaid, health workers are demoralised, services stall, and facilities downsize or shut down altogether,”

Kigondu maintained that while the intention and architecture of SHA is sound, its implementation has so far exposed deep structural flaws.