NHIF scandals resurface in Ruto’s SHA system

By Newsflash Team

The specter of the disbanded National Health Insurance Fund (NHIF) is once again looming over Kenya’s healthcare sector—this time, through its much-heralded successor, the Social Health Authority (SHA).

Barely months after the launch of SHA, marketed as a digital overhaul that would end entrenched graft, Health Cabinet Secretary Aden Duale revealed that 31 hospitals have been caught manipulating the Sh104 billion system—allegedly the very mechanism meant to eliminate such corruption.

These disclosures, made public yesterday, have cast a shadow over the government’s most ambitious and expensive health reform, triggering renewed skepticism about its integrity and resilience.

The implicated hospitals, scattered across 12 counties including Kisumu, Kiambu, Bungoma, Busia, Kajiado, Kilifi, Mandera, and Wajir, are believed to have exploited systemic weaknesses in a disturbingly coordinated manner.

According to CS Duale, the fraud involved multiple schemes: false outpatient claims, duplicated billing, coerced admissions, manipulated pre-authorisation codes, ghost patients, and the illicit exchange of patient codes across institutions.

“We are coming after every individual involved in this fraud,” Duale vowed. “They will face prosecution, and all misappropriated funds will be recovered.” He added that advanced analytics and AI integrated into SHA are now being used to detect and flag irregularities in real time.

The Kenya Medical Practitioners and Dentists Council has already suspended the operating licenses of all facilities under investigation.

Bizarre billing and blood donation scams

The examples Duale cited suggest a pattern of bold and shameless deceit. In one shocking case, facilities allegedly billed the system for five-day hospital admissions for patients who had only gone to donate blood—an act typically completed within three hours. “We found instances where someone donates blood and is recorded as admitted for five days. That’s not just unethical—it’s criminal,” he said, emphasizing that such facilities will be compelled to refund every shilling.

However, the Health Ministry is yet to disclose the total amount lost or publicly name the 31 hospitals facing suspension. What’s becoming clear is that SHA’s rollout, initially intended to redeem a healthcare system long stained by NHIF scandals, is fast beginning to echo the very failures it was designed to erase.

Just weeks before SHA became operational, Parliament exposed how NHIF had bled nearly Sh21 billion through a murky scheme called “Incurred But Not Reported.” In July, the fund lost a further Sh368 million to suspicious overpayments attributed to “typing errors.” These missteps were widely cited as justification for SHA’s creation—yet now appear more like early warnings ignored.

The scandal directly challenges President William Ruto’s assertions about SHA’s incorruptibility. During a funeral address in March, Ruto lashed out at critics, accusing them of wanting to keep old fraud channels open.

“They oppose this system because it threatens their theft. The era of free, unaccountable money under NHIF is over,” Ruto said then. “We’ll only pay for verified services. The days of brokers and conmen eating 40 percent of NHIF’s funds are behind us—so long as I’m President.”

Promises of technology

These bold proclamations are now coming under scrutiny as it becomes evident that digitization has not immunized the system against fraud—it has merely relocated it.

In October 2024, then Health Principal Secretary Harry Kimtai outlined the SHA vision in an interview, saying digitizing the contracting and claims process would “minimize human intervention,” thereby ensuring speed, accuracy, and transparency. “Hospitals will now upload their claims directly to the system, which then validates and triggers payment automatically, based on set criteria,” Kimtai explained. This, he argued, would drastically reduce the kinds of delays and manual manipulations that plagued NHIF.

The SHA system was supposed to sever direct ties between health facilities and staff from the national insurer, removing the human loopholes that led to widespread abuse. “We amended the law,” Kimtai said. “Under NHIF, staff would move from hospital to hospital doing physical verifications, which led to fake inspections, fraudulent ratings, and payouts for services never rendered.”

The goal was to eliminate the human hand from the process entirely. Instead, what seems to have emerged is a more sophisticated environment where digital systems are being gamed just as effectively.

Now, CS Duale finds himself on the defensive, having to justify a system whose primary selling point—fraud prevention—has suffered an embarrassing breach. “This is not business as usual,” he insisted. “Our digital tools catch fraud daily—during claim submissions, clinical assessments, and payments. Our internal and forensic teams are compiling a comprehensive dossier. This is not a press story—it’s a criminal matter. Once ready, we’ll forward the names to DCI for prosecution.”

Yet, his focus on post-fraud detection misses the core concern: if fraud is being uncovered only after it has occurred, can the system still claim to be preventive?

The situation brings into question SHA’s credibility. How could a Sh104 billion digital safeguard, touted as Kenya’s healthcare salvation, be so easily compromised? What assurances can the government now give that future attempts at reform won’t simply follow the same tragic script? The Ministry of Health’s silence on specific losses and the unnamed hospitals only adds to public mistrust. For a system that claimed to champion transparency, this cloak of secrecy is eerily reminiscent of NHIF’s darkest days.

And so, Kenya finds itself at a familiar crossroads—watching a high-tech health revolution falter under the weight of old-school corruption. SHA may wear digital armor, but it has clearly not exorcised the demons of NHIF. Instead, the same ghosts—greedy, deceptive, and persistent—are once again feasting at the heart of Kenya’s healthcare system.

The Sh104 billion question is whether the government will confront them head-on—or simply rename the next scandal. For now, the ghosts have the upper hand, and the patients, as always, remain the forgotten casualties.