Ghosts of NHIF fraud return to haunt Sh104bn health system
What you need to know:
- Some 31 hospitals across the country stand accused of systematically defrauding the Sh104 billion system.
- CS Duale painted a picture of elaborate deception involving double billing, outpatient claim scams and forced admissions.
The ghosts of the defunct National Health Insurance Fund (NHIF) have returned to haunt Kenya's healthcare system.
Just months after the government launched the Social Health Authority (SHA) with promises of a fraud-proof digital revolution, 31 hospitals across the country stand accused of systematically defrauding the Sh104 billion system designed to eliminate the very corruption they are now perpetrating.
The revelations, announced on Monday by Health Cabinet Secretary Aden Duale, represent a devastating blow to the government’s credibility and raise fundamental questions about the effectiveness of Kenya’s most expensive healthcare reform.
The suspended facilities operate across 12 counties—Kisumu, Kiambu, Bungoma, Busia, Kajiado, Kilifi, Mandera, Wajir, among others—suggesting coordinated exploitation of the new system’s vulnerabilities.
Mr Duale painted a picture of elaborate deception involving double billing, outpatient claim scams, forced admissions, pre-authorisation code abuse, ghost patient admissions, and illegal sharing of patient codes between facilities.
“We will pursue all fraudulent actors to the full extent of the law, including criminal prosecution and full restitution of illegally obtained funds,” CS Duale declared.
“Advanced analytics and artificial intelligence through the digital system are assisting us to scrutinise every claim, protecting resources meant for genuine patients,” he added.
The Kenya Medical Practitioners and Dentists Council has already suspended the licences of all implicated facilities pending investigations. The specific examples Mr Duale shared reveal the brazen nature of the schemes.
In one case, hospitals billed SHA for five-day admissions when patients had merely donated blood—a process typically taking not more than three hours.
The Social Health Authority building, Nairobi in this picture taken on October 6, 2024.
“Many of the facilities will be forced to reimburse. We know that when a Kenyan goes to donate blood, it takes about three hours, but in some records, we noticed that they are admitted for five days. That is immoral. That is illegal. That is pure theft,” he said.
The ministry did not disclose how much taxpayers’ money has been lost, while the names of the 31 suspended facilities had not been shared by the time of going to press.
The crisis becomes more damning against NHIF’s well-documented failures.
Just a month before SHA launched, MPs discovered that NHIF had lost approximately Sh21 billion through fraud, attributed to a dubious process called “Incurred But Not Reported”.
In July, the insurer lost an additional Sh368 million through overpayments blamed on “typing errors”.
These revelations were supposed to justify SHA’s expensive birth. Instead, they now read like a preview of things to come.
The scandal directly undermines President William Ruto’s political narrative around SHA.
Speaking at a funeral in March, the President accused detractors of opposing the system because they wanted to continue looting.
“They do not want a technology system that works because they want to continue stealing from us. The stealing is over. Move on. We are not going to give free money as was being done under NHIF to hospitals without accountability. We are only going to pay for services rendered,” he declared.
NHIF money stolen by crooks
His rhetoric grew more pointed: “They think we are fools? There is no government money that will be used to pay for any system because we want to sort out the problem of the fraud of the past. A lot of money that was being collected by NHIF used to be stolen by brokers and crooks who used to pretend they have hospitals through fake claims, fraudulent claims and consumed almost 40 per cent of the money that was being raised by NHIF and that shall never happen again when I am still the President.”
These words, spoken with certainty months ago, now serve as a painful reminder of how quickly political promises crumble when confronted with institutional reality.
The promise of SHA was built on technological optimism. Former Health Principal Secretary Harry Kimtai had articulated this vision in an October 2024 interview with Nation.
“By digitising the contracting process, SHA promises a more efficient and transparent system that minimises human intervention in claim approvals and hospital contracts,” Mr Kimtai explained, adding:
“This will enable hospitals to upload claims directly into the system, which will automatically process the data and trigger payments based on pre-set conditions, significantly reducing delays that previously plagued the NHIF.”
Unlike NHIF, where staff directly licensed hospitals and manually processed claims—creating manipulation opportunities—no hospital would deal with SHA staff directly.
“With the new system, the staff will no longer conduct any business with SHA but the system will. We changed the law. It was NHIF staff who would move around hospitals doing the inspection, lodging that in the system, and this led to manipulation. Hospitals were paid for services that they do not offer, institutions rated highly,” Mr Kimtai said.
This technological solution was supposed to eliminate human weakness from the equation. Instead, it appears to have provided new avenues for old corruption.
On Monday, CS Duale found himself defending a system whose primary selling point—fraud prevention—had been spectacularly undermined.
“It is not business as usual,” he insisted. “Our system detects fraud every day; either at the clinical stage, payment, lodge of the claim and all. Our internal, forensic and system auditors of the Digital Health Agency are compiling the list of all that, and the file is not for the media. Once we finish, the names will be taken to the Directorate of Criminal Investigations and then to the courts for prosecution.”
Designed to prevent fraud
His emphasis on fraud detection capabilities seemed to miss the point—that the system was supposed to prevent fraud, not just detect it after the fact.
The crisis raises fundamental questions the Health Ministry has yet to answer.
How was a Sh104 billion system specifically designed to prevent fraud bypassed so easily? What guarantee do Kenyans have that future reforms won’t suffer the same fate?
The ministry’s refusal to provide specific details about financial losses or facility identities only deepens concerns. In a system supposed to embody transparency, such opacity feels like a return to NHIF’s bad old days.
The Sh104 billion question now is whether the government can confront these ghosts more effectively than it did with NHIF, or whether Kenyans are destined to watch the same corruption story unfold repeatedly, dressed in new digital clothes but unchanged in its essential character.
For now, the ghosts are winning, and Kenya’s patients—the intended beneficiaries of this expensive revolution—remain the ultimate victims.
