At least 91 percent of healthcare facilities in Kenya contracted by Social Health Authority (SHA) are experiencing financial challenges, with many facing difficulties in paying staff, sourcing essential medications, or covering operational costs, according to a new report.
The report by the Rural and Urban Private Hospitals Association of Kenya (Rupha) reveals that delayed payments by government entities is the main reason for the institutions' inability to fulfil their basic financial obligations between April and May 2025, including paying suppliers, servicing debts and maintaining critical services.
While this is an improvement on the 96 percent reported between October and December of the previous year, it remains alarmingly high and signals a prolonged and systemic financial crisis within Kenya’s healthcare system.
The report surveyed 477 facilities at all levels of care, from public, private, and faith-based institutions.
The report states that 77 percent of facilities have difficulty covering operational expenses, 76 percent struggle to pay staff, 69 percent cannot pay suppliers, and 63 percent lack essential medications and equipment.
Faith-based facilities are the most affected, with financial strain levels increasing from 98 percent last quarter to 100 percent in the current report, highlighting the severity of the situation.
While public hospitals are partly cushioned by government salary support, they have experienced a slight increase in distress, rising from 83 to 84 percent.
The report attributes the financial distress primarily to unpaid claims from the now-defunct National Health Insurance Fund (NHIF), which has a negative impact on hospital cash flows.
“Additionally, delayed disbursement of Primary Health Care (PHC) funds and slow processing of reimbursements under the new Social Health Insurance Fund (SHIF) are deepening the crisis,” said Dr Brian Lishenga, chairman of Rupha.
"Most facilities are caught in transition, grappling with old debts while awaiting new payments that have yet to materialise."
Around 43 percent of facilities reported that NHIF arrears were their biggest financial burden, while 42 percent cited unpaid PHC claims and 15 percent highlighted delays in SHIF reimbursement.
The financial strain varies by facility type and ownership. Level 2 hospitals, which primarily offer primary healthcare services, are under the most pressure, with 88 per cent reporting financial stress due to missing monthly allocations.
Level 3 hospitals face a more diverse range of issues. 45 percent cited NHIF arrears, 39 percent blamed delays in PHC funding and 16 percent cited delays in SHIF reimbursements.
Level 4 hospitals, which provide more specialised care, primarily struggle with NHIF and SHIF issues. Only one percent reported difficulties with PHC funding, while 67 percent were affected by NHIF arrears and 31 percent by delayed SHIF funds.
“Among Level 5 referral hospitals, 88 percent identified NHIF arrears as their main financial challenge, with 12 percent reporting SHIF delays. These hospitals rely heavily on reimbursements for inpatient and surgical services, many of which are now overdue,” the report read.
According to the report, faith-based hospitals are the most vulnerable: 60 percent cited NHIF arrears, 24 percent mentioned PHC delays and 16 percent were impacted by SHIF issues.
Private hospitals are similarly affected, with 52 percent burdened by NHIF arrears, 28 percent by PHC funding delays and 21 percent by SHIF funding delays. While public hospitals are protected from payroll gaps, they struggle with operational budgets, with 75 percent reporting PHC funding shortfalls as their primary challenge.
The financial strain is particularly acute at lower levels of care. A worrying 88 percent of Level 2 facilities reported being unable to pay staff, while 85 percent lacked critical supplies and 80 per cent were behind on operational costs.
“Furthermore, 71 percent owed payments to suppliers. Level 3 hospitals are not far behind, with 75 percent experiencing payroll issues and 72 percent struggling to remain operational. Level 4 facilities, which generally have larger financial liabilities, are the most exposed to credit risk: 35 percent have defaulted on loans, and 16 percent are at risk of auction,” read the report.
Faith-based hospitals were the most financially unstable of the different facility types, with 87 percent reporting payroll issues, 86 percent unable to fund daily operations and 73 percent unable to pay suppliers. Over half had taken out new loans and nearly 40 percent had defaulted.
Private facilities follow closely behind, with 84 percent unable to pay staff, 82 percent owing payments to suppliers and 80 percent struggling to operate. Almost half have defaulted on loans, 25 percent are facing threats of asset auction and two percent have already closed.
While public hospitals are more stable due to direct government salary support, they are still under pressure. Around 66 percent are unable to cover daily operational expenses, 56 percent are struggling with payroll and 51 percent cannot pay suppliers.
To survive, many facilities are relying on debt: 36 percent have taken out new loans or overdrafts, 30 percent have defaulted on repayments, 13 percent face the risk of property auction, nine percent are involved in legal cases in small claims courts and one percent have already shut down.
