More than 600 private hospitals in rural parts of the country will from next Monday not accept Social Health Authority (SHA) insurance and instead demand that patients pay in cash over an outstanding Sh22 billion debt owed by the defunct National Health Insurance Fund (NHIF).
The Rural-Urban and Private Hospitals Association of Kenya (Rupha) said hospitals were left with no choice after months of unfulfilled government promises to settle arrears owed under the defunct public insurer, dating back to 2017.
"We have contacted the government countless times, but our concerns have been ignored. The hospitals are drowning in debt, and we can no longer sustain operations under these conditions," Rupha Chairman Brian Lishenga said.
In addition, Rupha hospitals will no longer provide services under the Medical Administrator Kenya Limited (MAKL) scheme, which covers police officers and teachers.
The association has accused MAKL of failing to pay hospitals for more than 11 months, forcing them to accept unexplained discounts and favouring its clinics in an uncompetitive and unethical manner.
"Hospitals have been forced to bear the financial burden of a system that is simply not working. Without urgent government intervention, teachers and police officers will lose access to private healthcare, putting further pressure on already overstretched public hospitals," said Dr Lishenga.
Rupha further explained that the Ministry of Health has maintained that the SHA, is not legally responsible for settling historical debts incurred by NHIF.
"This stance has pushed hospitals into a financial abyss, leaving them unable to provide essential health services," said Dr Lishenga.
"These are debts for services already rendered. Hospitals have used their resources to treat patients, expecting to be reimbursed by the NHIF. Now they are being told that these debts are not a priority. How are we supposed to survive?" asked Dr Lishenga.
According to Rupha, the ongoing financial strain has had devastating consequences, leading to massive job losses as hospitals struggle to pay salaries to doctors, nurses, and other medical staff.
Many hospitals have defaulted on loans taken out to keep them running, while pharmaceutical suppliers have blacklisted them for unpaid bills, leading to stock-outs of essential drugs.
Specialist doctors have gone unpaid for years due to delays in reimbursements, and hospitals are being saddled with taxes for NHIF claims they never received.
"It is absurd that hospitals are required to declare NHIF claims as taxable income while these same claims remain unpaid. This has resulted in huge tax liabilities and penalties, exacerbating an already dire situation," said Dr Lishenga.
Findings from the seventh SHA Transition Status Report (February 2025) reveal widespread dysfunction in the SHA system, with 89 percent of hospitals reporting that the SHA claims portal remains non-functional, making it impossible to process reimbursements.
More than half of hospitals have not received any payments from the SHA since December 2024, while 83 percent face challenges in verifying patient eligibility, resulting in many being denied care. SHA outpatient services received a poor score of 1.87 out of five, as healthcare providers warn that the reimbursement model is unsustainable.
"The SHA's outpatient payment model is completely unrealistic. Paying hospitals less than Sh75 per patient per month is an insult. No hospital can pay its staff, procure life-saving drugs, or sustain operations under such a system," said Dr Lishenga.
Rupha is now calling on the government to urgently clear the Sh30 billion NHIF arrears or provide a clear repayment plan, revise the SHA's outpatient reimbursement model to reflect actual operating costs, and ensure fair and timely payments under the MAKL scheme.
"This is not a decision we wanted to make, but we have been left with no choice. If we continue with the current system, hospitals will collapse and lives will be lost," said Dr Lishenga.
The Ministry of Health has blamed a Sh43 billion debt inherited from the NHIF for disrupting services at both public and private hospitals, forcing patients to pay out of pocket.
Medical Services Principal Secretary Harry Kimtai told the National Assembly's health committee last week that the financial burden owed to healthcare providers and co-insurers was caused by delayed remittance of insurance premiums by various ministries and state agencies.
"The delayed payments have disrupted service delivery and put pressure on both public and private health facilities that rely on timely reimbursements," said Mr Kimtai.
