Auditor General Nancy Gathungu has exposed massive losses at Kenyatta National Hospital (KNH), amounting to Sh678.4 million in the year ending June 2024, largely blamed on underfunded contracts with the defunct National Health Insurance Fund (NHIF) and the government’s Linda Mama programme.
In her latest audit, Gathungu revealed that KNH has been forced to absorb huge deficits because reimbursements under the two schemes fall far below the actual cost of care. The bulk of the losses — Sh459.2 million — stemmed from NHIF, while Linda Mama accounted for Sh219.2 million.
Losses linked to NHIF rose by 17 per cent compared to Sh379.1 million in the previous year.
Gathungu noted that although KNH engaged NHIF and the Ministry of Health between 2016 and 2022 to review the contracts, a renegotiated agreement effective July 2022 still left the hospital running annual deficits.
“The NHIF loss arises where the medical cost incurred by a patient who is a contributor is greater than the rebate reimbursed by the fund,” the report states. “In the circumstances, the hospital continues to bear the losses unless the NHIF reimbursable amounts are reviewed upwards.”
For Linda Mama, reimbursements remained capped at Sh17,500 per delivery, even when critical or neonatal care costs exceeded Sh100,000.
Losses under the programme rose by 13 per cent to Sh219.2 million, despite a 2017 revision allowing KNH to claim an additional Sh4,000 per day when complications occur.
Gathungu warned that without further tariff adjustments, “the hospital continues to bear the losses arising from free maternity programmes.”
Beyond service contracts, the Auditor General flagged serious delays and cost escalations in key infrastructure projects at KNH.
The Paediatrics’ Emergency and Burns Management Centre, originally budgeted at Sh2.99 billion, has ballooned to Sh3.4 billion — an increase of Sh435 million — due to delayed payments that accrued interest.
Funded through a Sh1.2 billion loan from development partners and Sh1.7 billion from the government, the facility was due for completion in August 2020.
However, despite a loan extension up to July 2024, the project remains incomplete with no evidence of renewed financing arrangements.
“In the circumstances, value for money on amounts spent on the construction of the paediatric emergency and burns management centre could not be confirmed,” Gathungu observed.
The audit also raised concerns over the stalled Medical Oxygen Generating Plant, budgeted at Sh365.7 million. Launched in May 2022 and due by November of the same year, the project was still incomplete as of December 2024 — more than two years behind schedule.
