Ruto: State did not pay Sh104b for SHA system

President William Ruto has dismissed reports that the government procured the Social Health Authority (SHA) digital superhighway at a cost of Sh104 billion.

The Sh104 billion is the total project service fee over the next 10 years, and not a lump sum government payment.

Speaking on Tuesday during a town hall engagement that culminated the just-concluded Health Summit, the president said the arrangement approved by the government was similar to a Public-Private Partnership (PPP).

“There is no Sh104 billion contract,” President Ruto said.

With the model, private companies invest in digital infrastructure and are paid over time for services delivered rather than receiving the entire amount upfront.

The president compared the arrangement to the National Equipment Service Programme (NESP), under which medical equipment such as MRI and CT scanners, as well as theatre machines, are provided to public hospitals and counties through contracts.

Under the model, private service providers invest in and maintain the equipment, while the government pays based on the services or workload generated.

“We have told manufacturers to invest. They bring the machines, we invest. It is their business to make sure the machines are working and operational. Ours is to provide services,” said President Ruto.

Different private companies and consortia were contracted by the government to provide digital infrastructure.

The SHA digital infrastructure is therefore used to support the country’s health system, with payments tied to services provided rather than a single upfront government expenditure.

The model he said was agreed on by the public through public participation, and had it enacted by the Parliament.

Cost of payment was also agreed on.

“We asked companies to invest their and money to health digital platforms, we took this to Parliament and public agreed on,” said the president.

The government, he highlighted agreed that no more than five per cent of resources collected would be spent on administration, including payment for digital platforms.

Digital Health Agency (DHA) Chief Executive Officer (CEO) Anthony Lenaiyara said SHA has only paid Sh500 million to digital system service providers.

A deduction of Sh25, Lenaiyara explained is done for only active SHA member, annually. The deductions are spread across the year.

“It is not true,” said Lenaiyara in reference to payment to run the digital infrastructure.

Respective consortiums were contracted to provide the service, which supports 43 digital health services, in support of Universal Health Coverage (UHC).

The DHA said during repeal of National Health Insurance Fund (NHIF) it was revealed that most public hospitals that serve majority of Kenyans were not digitally aligned.

The facilities used to receive 5 per cent reimbursement, that has since grown to 62 percent under SHA.

“We gave them software that that helps in efficiency, and accountability for claims. Hospital claims are trapped,” sad the DHA boss.

Lenaiyara highlighted that digital infrastructure has enhanced data storage, workflow efficiency and eliminated fraud, as witnessed under the defunct NHIF.

On data, for instance, he said there was no data portability, but today, every Kenyan is identified using an Identification (ID) card.

“The role of technology is efficiency,” he said. “There used to be fake doctors who used to cheat Kenyans. Today, only licensed doctors are allowed to provide service”.

“Also, many Kenyans used to walk with books for health data. Today, paperwork has been eliminated,” added Lenaiyara.

Additionally, the technology has enhanced logistics, for example, at KEMSA, it enables tracing of drugs from manufacturers to patients.

Only authorised drugs are procured.

Telemedicine has also been adopted with the technology.

The digital superhighway has enabled SHA to recover about Sh300 million from fraudulent claims, with at least 15 cases under investigation, at DCI with a number undergoing internal SHA audit.

In April, counties of Bungoma, Homa Bay, Mandera, Wajir and Kisii flagged fraudulent in Social Health Authority (SHA), with 12 hospitals shut down in a sweeping crackdown on allegations of fraud.

The five counties were identified to have perennial fraud ecosystem, with private hospitals listed as the most notorious, according to reports by the Ministry.

At least 12 hospitals linked to SHA fraud were also closed in March.

 Lenaiya’s input on technology was echoed by President Ruto who added that digitalisation of the health system has improved efficiency, reduced human error, eased workloads and helped the government detect and prevent fraud.

The president cited NHIF that recorded multiple fraudulent claims and exaggerated surgeries, that costed tax payers money.

Under NHIF for instance, some facilities were reporting more surgeries than Kenyatta National Hospital (KNH), while unqualified practitioners were allegedly conducting procedures and making fraudulent claims, said Ruto.

"We have individuals taken through several leg amputations, and you could question how many legs a person has," posed Ruto.

Currently, he said digital system now requires surgeries to be authorised by SHA, while doctors and facilities providing services must be licensed and operate within the approved SHA benefits package.

The system also allows the government to track medicines from manufacturers to health facilities and ultimately to patients, helping ensure that the drugs dispensed are licensed and accounted for.

The President said digitalisation had also allowed SHA to operate with a smaller workforce compared with NHIF.

SHA currently has an establishment of 815 employees, compared with about 1,700 employees under NHI- the employees he said have since been deployed to other government departments to serve.

Nevertheless, President Ruto refuted claims that hospitals were paying private entities to run the SHA digital system.

“I can confirm hospital money goes to DHA, which is in law. Facilities pay two percent with a maximum of Sh5,000,” he said.

The move to deduct hospitals has been challenged in the courts by three petitioners namely Dr Magare Gikenyi, Eliud Karanja Matindi and Okiya Omtatah Okoiti.

The petitioners claim that the money is going into private pockets, of illegal and fraudulent entities.

Additionally, petitioners raised an issue with double taxation, arguing that there is no legislation nor statutory authority, authorizing the respondents to deduct the said 2 percent Health Information Management System (HIMS) utilization fee from the claimed amount nor the purpose of the same.

They noted that there is no clear road map where there 2 percent HIMS System Utilization fee goes and how its budgeted and appropriated.

The 2 per cent HIMS System Utilization fee according to the petition at the courts is not based on any legislation.

But the deductions are part of the 2025 regulations, passed by both the National Parliament and the Senate.

“Two percent of services offered through Health Information Management Services (HIMS) provided that the amount charged shall not exceed Sh5,000,” reads a section of the regulation.