Hospitals, patients suffer after government ignored NHIF warnings

The National Health Insurance Fund (NHIF) board raised alarms over potential risks in shifting to the Social Health Authority (SHA), warning that a hasty transition could destabilise healthcare services.

The Rural and Urban Private Hospitals Association of Kenya (Rupha) has revealed that the government ignored the warnings, leading to hospitals grappling with financial instability and system failures.

Rupha said before NHIF was phased out, its Board had outlined concerns that needed urgent attention to ensure a smooth shift. Among them was the need for a structured transition process that allowed NHIF operations to be finalised before SHA took over. However, these recommendations were dismissed, resulting in disorder within the healthcare system.

“There is a need to increase focus on human resources. This will increase customers and add resources while focusing on all aspects of health to achieve effective delivery in addition to ensuring available services,” NHIF’s Board had advised.

Rupha has been vocal about the situation, pointing to financial instability and strained operations in hospitals. The SHA Board, which took office in July 2023, rushed structural changes without addressing fundamental issues.

One of the most significant problems has been the lack of time for NHIF’s work to be properly wound up before SHA took charge. The rushed rollout confused healthcare providers, insurers and policyholders. Hospitals faced operational disruptions, patient services were delayed and claims processing became complicated.

“We were unprepared. There was no time to understand the new system. This caused chaos in the hospitals,” Rupha officials said.

NHIF had identified technology risks before the transition and recommended that SHA’s system be tested alongside NHIF’s existing infrastructure. However, SHA opted for an immediate switch, which resulted in technical failures, slowing down claims processing and making it harder for policyholders to access healthcare services.

A February 16 Rupha report revealed that 83 per cent of healthcare providers had difficulty verifying patients due to delays in one-time passwords (OTPs). The issue was worsened by the fact that 59 per cent of the sick did not have access to mobile phones.

“Technology should drive business and should be seamless. The two systems should have run parallel instead of having a direct changeover. There was a need to map out the systems beforehand for the new system to be implemented,” reads the report.

Stakeholder engagement

Stakeholder engagement was another overlooked factor. NHIF’s Board had emphasised the importance of involving providers, insurers and contributors in the transition. Instead, Rupha said SHA moved ahead without their input, leaving hospitals, private insurers and county governments struggling to adapt.

“This exclusion resulted in service disruptions and strong resistance to SHA,” it said.

Financial strain also became evident as hospitals reported delays in payments and reduced capitation rates. By December 2024, 39 per cent of hospitals had not received any payments from SHA, while those that had received an average of 23 per cent less than expected.

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“We are operating at a loss. The government owes us millions of shillings yet we are expected to continue treating patients,” Rupha chairman Brian Lishenga said.

The transition also failed to account for staff preparedness. Lishenga said NHIF’s Board had stressed the need for proper training and orientation, yet many healthcare workers were left without guidance on SHA’s new procedures. Hospitals struggled to process claims, insurance offices faced backlogs, and policyholders encountered difficulties in accessing care.

Financial instability has also become a major consequence of ignored warnings. NHIF had cautioned that SHA needed strong financial structures to support universal health coverage. Ignoring this resulted in delayed reimbursements, pushing some hospitals to limit services for insured patients. Rupha’s latest report shows that as of last month, hospitals were in a financial crisis, with unpaid arrears amounting to Sh30 billion, some dating back to 2017.

On February 20, Rupha announced that over 600 affiliated hospitals would suspend SHA services from February 24. However, a week later, the government intervened with a new plan to settle NHIF debts, preventing the shutdown.

Another major oversight was the lack of a strategic communication plan. NHIF had stressed the need for public education to ensure Kenyans understood SHA’s benefits, contribution models, and claims procedures. However, misinformation and confusion characterised the transition, leaving many policyholders uncertain about their rights and access to healthcare.

Without a well-structured communications strategy, Rupha indicated that SHA struggled to gain public trust, contributing to the current healthcare crisis.

The government’s failure to heed NHIF’s warnings has now left hospitals, policyholders and healthcare providers grappling with an avoidable mess.