The owner of a 21-bed-capacity hospital in Nairobi has admitted to MPs that he pocketed Sh400 million from the ailing National Hospital Insurance Fund (NHIF) in claims in just two years, with the insurer still owing him Sh78 million.
Mr Kennedy Otieno, the owner of Joy Nursing Home in Eastleigh, made the admission during a fact-finding mission by the National Assembly's Health Committee on Monday.
He was responding to questions raised by the committee chairman Robert Pukose (Endebess) during the MPs’ investigations at three health facilities in Eastleigh, namely Beirut Hospital, Amal Hospital and Joy Nursing Home.
Mr Otieno asked the MPs to find out from the Kenya Medical Practitioners Pharmacists Dentists Union (KMPDU) how his facility licensed and accredited to be a Level Four facility.
The hospital is a certified Level Four facility despite having only 21 beds against the requirement of 30 beds each for males and females, dilapidated toilets, no electricity, only one microscope, and no emergency exit.
"We handle about 20 patients a day. Initially, we had 40 beds but when we expanded we removed beds to make way for a second theatre, an optical [room] and a dental room," he told Nyeri Town MP Duncan Mathenge, who also wanted to know why they did not have a blood transfusion unit, life support equipment and a mortuary, among other key requirements for a Level Four facility.
Mr Otieno, who runs the hospital with an assistant director who introduced herself as Immaculate Atieno Otieno, told the committee that he is a trained nurse by profession and holds a diploma.
"I used to run a pharmacy here, which grew and gave birth to this hospital in 2006," he said.
"You see, we did not license ourselves. There is someone from KMPDU who came to inspect us, approved us and then gave us accreditation," the owner told the committee.
"We get patients from all over, especially from Meru, Narok and Machakos," Mr Otieno told the lawmakers as he struggled to explain how a 21-bed hospital could generate NHIF insurance claims worth Sh400 million.
He was also at pains to explain how they could perform and deliver hundreds of surgeries in a week without essential equipment.
Mr Mathenge told Mr Otieno: "If you look at the number of surgeries carried out during the period under investigation and what we have seen in terms of capacity, there is a clear discrepancy. It's not possible to have done these surgeries in such a dilapidated, tiny facility."
Kitutu Chache South MP Anthony Kibagendi, while agreeing with his colleague, wanted to know why and how Mr Otieno decided to locate the hospital in a residential building and how he got permission to do so, which the nurse could not explain.
"A total of 54 claims from your hospital worth Sh70 million had radiology films manipulated for pre-authorisation in an attempt to justify procedures that were never done. How do you explain this?" the lawmaker asked Mr Otieno, who went silent before revealing that his radiographers could have manipulated the reports.
Mr Mathenge pointed out that the hospital owner had admitted that he did not employ a radiologist at the facility.
"A radiographer is a technical person whose role is to capture the diagnostic images. They cannot report, only a radiologist can do that," the lawmaker said.
Mr Otieno, however, said despite knowing all this, quality assurance officers from the NHIF’s Eastleigh branch visited the hospital before granting it accreditation.
"For procedures that require pre-approval from NHIF, such as surgeries, we wait for NHIF approval if it's not an emergency," he said.
Joy Nursing Home is among Kenyan hospitals suspended for five years after internal investigations by NHIF found that rogue health facilities had defrauded the fund.
"Our fact-finding mission is getting more insights into the collusion between these hospitals, NHIF authorities as well as some officials at KPDMU who license and allow them to operate and siphon public funds in a graft scheme that has cost taxpayers billions," the Health committee said, promising to get to the bottom of the matter.
Last year, in an official report to the Health Committee, the NHIF lifted the lid on how some of its staff colluded with India-based healthcare providers to siphon off millions of shillings through dubious and fraudulent medical claims and payments.
"We acknowledge that fraud and corruption have regrettably infiltrated the health sector and pose significant challenges to the achievement of our mission of providing equitable access to healthcare, with an impact assessment study presented to the board in 2020 estimating the risk of medical fraud at 29.3 per cent," NHIF said in its report to the Ministry of Health.
Further highlighting the rot in the scheme, Mr Mathenge said:
"I have a witness from Meru who is willing to testify here as he was being treated for hypertension but a hospital billed him through the NHIF system for the treatment of two limb fractures. He even got an OTP verification message. Can you explain how this happens?"
"We need to see the movement of money at NHIF in terms of short-term deposits. It should go hand in hand with the revenue streams for each year for the last three years," he added.
Kenya Pharmaceutical Distributors Association (KPDA) chairperson Kamamia wa Murichu, who appeared before the committee as an expert, agreed with MPs that the NHIF was being abused by rogue officials who work in cahoots with some hospitals.
"The hospitals that charge for drugs and are service providers under NHIF are grossly abusing the process. They charge exorbitant amounts, two to five times more for the generic version of the drug but quote the price as it would cost for the original version of the drug when they claim money from NHIF," he said.
"A drug costs Sh600 at the pharmacy level when sold to the patient, but at the hospital, the same drug costs four or five times the usual price and then when the claim is sent to NHIF, it is indicated as the original version of the drug."
The MPs were also shocked to learn that NHIF's Head of Provider Management (Quality Assurance Lead) Abdullahi Ali was a geologist at the time and had him sacked.
The health committee then went to the Beirut Hospital in Eastleigh, which was empty.
"They cleared out and moved away after the scandal broke," a Kenyan living near the facility told the Nation.
When the MPs arrived at Amal Hospital in Eastleigh, it was locked, although residents and police told the MPs that the facility was fully operational on Sunday night.
"We have learned that suspension of a licence does not necessarily mean suspension of services in this country," Mr Mathenge said before the committee finally made its way to Equity Afya, Buru Buru branch, to establish the truth about allegations of siphoning off up to Sh3 million through the Edu Afya Scheme.
“It is either the administrators of Amal Hospital appear before this committee or the courts will compel them to do so.”
Speaking on what they had gathered, Mr Pukose said, "we will now move on to other hospitals across the country accused of NHIF fraud and then make a comprehensive report and recommendations on the way forward.”
