The World Bank has proposed adjustments to Kenya's health financing model, among them a review of the removal of user fees in hospitals.
The lender says in a new document that while the model of financing is meant to reduce out-of-pocket expenditure for the majority of Kenyans, it is not being met by equivalent compensation from the exchequer.
The Bretton Woods institution also suggests that the government is getting it wrong on Universal Health Coverage (UHC) as it seems to be prioritising specialised care rather than primary healthcare.
The views are contained in an analysis released in July dubbed, the Kenya Public Expenditure Review for the Health Sector for the 2014 to 2020 financial years, which also provides a glimpse of how investments in the sector should be made for the future.
The report says the public expenditure review across all areas analysed shows the government has prioritised specialised care, citing conditional grants that have increasingly financed medical equipment for specialised services; and an increasing share of drugs spent at national referral hospitals - while there is a dire need of inputs at lower-level facilities.
"If the government is to make progress on UHC in a sustainable way and maximise the return on investments from public spending, it needs to prioritise investments in primary healthcare moving forward," the report says.
This, it says, is especially the case in light of the increasing burden from non-communicable diseases and the ageing of the population, as these will increase the need for prevention and routine services, many of which can be provided at the primary level.
The report was produced by a team from the World Bank's Health, Nutrition and Population Global Practice. The team was led by World Bank senior economist Laura Di Giorgio, analyst Katelyn Jison Yoo and consultant Thomas Maina.
The Public Expenditure Review (PER) describes and analyses health spending patterns in Kenya during the past six years against the UHC objectives set by the State of expanding access to adequate and quality healthcare for all Kenyans without incurring financial hardship.
It looks at both national, through the Ministry of Health, and county levels spending through the respective departments using multiple data sources and covering the period from 2014-15 to 2019-20 financial years.
The World Bank says despite the government's efforts on financial protection, out-of-pocket expenditures continue to make up a significant proportion of the total health spending and drive about a million individuals into poverty each year.
It notes that households from disadvantaged socio-economic backgrounds, with the presence of the elderly and with people battling chronic conditions, are more likely to suffer from impoverishing expenditure.
Even though the government removed user fees for public facilities in 2013 as one of the ways to reduce out-of-pocket expenditures, the World Bank notes there is a mismatch as public hospitals still operate under the cost-sharing policy.
This also applies to Linda Mama - a free maternity programme - now being managed under National Hospital Insurance Fund (NHIF).
All levels of private healthcare facilities are also still paid for through out-of-pocket payments.
"To further reduce out-of-pocket expenditures in Kenya, it is critical to address the role of the private sector, such as through the inclusion of more health facilities under the National Hospital Insurance Fund arrangement and coverage of pharmaceuticals," the World Bank advises.
Moreover, the lender says, compensation for the removal of user fees is deemed inadequate as the allocation is not being adjusted for the increasing number of health facilities and inflation.
"Evidence has shown that public health facilities are struggling to cover operating expenses because the reimbursed funds are often swept to the County Revenue Fund as County-Own-Source-Revenue and, therefore, do not reach health facilities," it adds.
The authors, however, say the public expenditure review provides positive evidence about Kenya's overall healthcare system and health financing performance as well as progress over time.
"To achieve upper middle-income country aspirations, Kenya will need to remain ahead of the curve by continuing to make progress on UHC - especially in light of the demographic and epidemiological changes - and addressing critical gaps, with a focus on improving inefficiencies," the report says.
"In terms of access to health services, the data for Kenya shows that life expectancy has increased much faster than its neighbours, health outcomes have generally improved, and socio-economic differences disparities in access have reduced."
As one of the recommendations, the World Bank says the government should manage the long-term gradual shift from supply-side financing to demand-side financing to ensure the health system is ready to provide quality services to its citizens.
It says making this transition requires ensuring that supply-side issues are addressed to ensure that people have access to care.