Court upholds Sh104 billion SHIF system, faults procurement

In a judgment on a petition filed by Busia Senator Okiya Omtatah, the court also found that the project was implemented before critical systems were in place, leading to locking out of most users.

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“The court finds that the national rollout of SHIF on October 1, 2024 occurred before the necessary administrative and technological infrastructure was fully prepared,” said the court. 

The evidence showed that during the early phase of implementation, many Kenyans were unable to access essential and life-saving medical services.

However, the court declined to nullify the contract citing potential disruption of healthcare services.

“These shortcomings do not warrant nullification of the procurement, but they do constitute procedural irregularities requiring corrective oversight,” said the court.

It, instead, ordered immediate corrective measures, including stricter oversight, transparency in procurement, and guarantees that no Kenyan is denied emergency treatment.

The court issued a structural interdict order compelling the State to fix procedural gaps. It said the government must guarantee access to emergency and life-saving treatment, introduce fair means testing for non-salaried Kenyans, and set up a clear, accessible complaints system. 

The judge stressed that universal health coverage must be implemented in a way that protects dignity and restores public trust.

“The Constitution demands no less. Universal health coverage cannot merely be proclaimed; it must be delivered in a manner that respects the dignity, health and trust of the people. The success of SHIF will ultimately be measured not by policy ambition, but by whether every Kenyan can access health care when they need it most,” the court said.

It directed the government to file within 90 days a detailed action plan outlining reforms and thereafter submit quarterly progress reports for one year to demonstrate compliance and protection of the right to health.

“The court must remain conscious of the present reality. The SHIF system is now operational and serves millions of Kenyans. Evidence before the court indicates that by early 2025, more than 18.7 million citizens had been onboarded and claims processing had begun to stabilize,” said the court.

“To nullify the system or invalidate the IHITS contract at this stage would risk precipitating a profound disruption in the health sector and jeopardising the state's efforts to achieve universal health coverage.”

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At the centre of the petition was legality of government’s procurement of the Integrated Health Information Technology System (IHITS) that links health providers, regulators and agencies, enabling financial claims processing, patient data management and integration across national and county facilities. 

The Sh104 billion project was awarded to a Safaricom-led consortium to power universal health coverage through a digital platform.

The court found that although the procurement was undertaken under a legally permissible framework allowing restricted tendering in urgent situations, the process fell short of constitutional standards.

“Administrative discretion is not a licence for opacity,” the court ruled, adding that the justification for limiting competitive bidding “was insufficiently documented” for a project of such national magnitude.

It held that the transparency expected in public procurement “was not fully met,” exposing procedural deficiencies in how the contract was awarded.
But in declining to cancel the tender, the court noted that doing so would cause severe disruption to the health sector and undermine ongoing reforms.

Nationwide rollout of SHIF

“Nullification at this stage would risk destabilising a critical national system designed to serve millions,” the court said.

The court emphasised that constitutional remedies must balance accountability with public interest, opting to correct the process without dismantling the system.

It also found that the nationwide rollout of SHIF on October 1, 2024 was irregular and unreasonable, as it was implemented before key administrative and technological systems were fully in place.

Evidence presented showed that patients were turned away from hospitals and unable to access essential and life-saving services during the transition from the defunct National Health Insurance Fund (NHIF).

The court said this failure violated the State’s obligation to protect the right to health and human dignity.

“The early phase of implementation resulted in denial of essential healthcare services, implicating constitutional guarantees,” the judgment stated.

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Despite these findings, the court upheld the legal framework underpinning SHIF, including the Social Health Insurance Act and related regulations.

It found that the establishment of key funds under SHIF, including those covering primary healthcare and critical illnesses, was constitutional and within Parliament’s mandate.

The tariff-setting process and regulations governing the scheme were also deemed lawful, having undergone public participation and meeting statutory requirements.

The petitioners had sought to suspend SHIF and nullify the IHITS procurement, arguing that the rollout was chaotic and lacked proper legal grounding.

They cited confusion in hospitals, lack of preparedness and alleged irregularities in awarding the multibillion-shilling technology contract.

The government and contractors defended the project as essential to delivering universal health coverage through a digital ecosystem connecting all players in the health sector.

In its final orders, the court dismissed all other prayers, ruling that the identified violations were capable of remedy without halting the programme.

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