Hospitals Threatens Closure As Govt Delays SHA Payments Forcing Patients to Pay Cash

A healthcare catastrophe is unfolding across Kenya as hundreds of private and faith-based hospitals teeter on the brink of collapse, with patients increasingly turned away unless they can pay cash despite being fully registered members of the Social Health Authority.

The crisis has reached breaking point, with facilities collectively owed more than Sh76 billion in unpaid claims by SHA, leaving hospital administrators with an impossible choice: continue treating patients on credit while drowning in debt, or demand upfront payment and risk violating government directives.

At the epicenter of this disaster is a digital health insurance system that promised universal healthcare coverage but has instead become a bureaucratic nightmare, trapping patients between empty hospital coffers and their constitutional right to medical care.

Dr. Brian Lishenga, chairman of the Rural and Urban Private Hospitals Association of Kenya, revealed that the payment crisis has escalated dramatically since SHA’s inception in October 2024, with some facilities now going five months or more without receiving a single shilling from the authority.

“It’s like being in a bad marriage that you cannot leave,” Dr. Lishenga told this writer, describing the untenable relationship between healthcare providers and the government’s flagship health insurance program.

The backlog is particularly severe for high-cost medical interventions, including inpatient surgical procedures, renal dialysis, cancer treatment and maternity services, some dating back six months with no resolution in sight despite repeated assurances from the Ministry of Health.

Behind the staggering financial figures are real people facing real emergencies with diminishing options.

Sylvia, who requested to use only her first name, found herself in a nightmare scenario at a Machakos hospital where her cousin had been rushed following a caesarean section emergency. Despite the life-threatening situation, the family was told SHA was not working and demanded a Sh13,200 down payment before treatment could begin.

“We don’t have that money,” Sylvia said, her voice strained with anxiety as she made frantic calls to friends and relatives outside the hospital ward where her cousin waited in pain. “I have seen on the internet that the president said we should go to the hospital and we will be treated for free. This is not free.”

Her story is being replicated thousands of times across the country, particularly in rural areas and urban estates where lower-level private facilities serve communities that cannot afford to travel to distant public hospitals.

The consequences extend far beyond inconvenience. Without drugs, laboratory reagents or functioning equipment, hospitals are forced to turn away emergency cases or provide substandard care, raising the specter of preventable deaths.

One Level 3A facility owner, who spoke on condition of anonymity for fear of government retaliation, described a descent into financial ruin that reads like a business horror story.

Owed Sh15 million by SHA over five months, the hospital owner had purchased Sh8 million worth of medical equipment on credit to comply with new government facility classifications, only to find himself unable to make the required Sh354,000 monthly payments to suppliers.

The equipment suppliers, tired of empty promises, moved to auction the hospital’s assets. In a desperate bid to prevent total collapse, the owner surrendered his anaesthesia machine at a substantial loss just to buy time.

“I gave it to them with the hope that SHA will pay. I don’t know what I will do when they come again next month,” the hospital owner said, his resignation palpable. “I agreed to give it away at a loss, but what do I do?”

The facility, like hundreds of others, continues to receive patients daily. With 29 million Kenyans now registered for SHA and educated to expect free services, hospital owners cannot refuse care without risking closure by government authorities who have demonstrated a hair-trigger response to facilities attempting to charge patients out-of-pocket.

“Patients are entitled. Our biggest headache is that we cannot ask them to pay in cash,” the facility owner explained. “I know of some facilities that tried that and some patients called SHA and that resulted in their closure. There was no investigation done.”

The pharmaceutical supply chain has also collapsed for many facilities. The hospital owner revealed that pharmaceutical companies have blacklisted his facility after months of non-payment, meaning drugs can now only be purchased with upfront cash the hospital doesn’t have.

“That is why we don’t have drugs,” he said. “We cannot tell this to patients. We agree to see them but sometimes we don’t even have reagents for lab tests.”

With monthly running costs exceeding Sh1 million, including Sh200,000 in rent, Sh354,000 in equipment debt, and Sh450,000 in staff salaries, the mathematics of survival have become impossible without SHA payments.

Some staff members have already been terminated, while others have agreed to stay on despite reduced salaries, creating a workforce crisis that compounds the medical emergency.

The Ministry of Health has maintained a firm stance that hospitals are at fault for unpaid claims, not the government.

In an interview last week, Health Cabinet Secretary Aden Duale insisted that SHA conducts payments every 14th day of each month and that unpaid claims result from missing documentation or errors flagged automatically by the digital system.

“Those that have not been paid either have a missing document or something was not done correctly, and the system flags it. Hospitals should stop claiming they do not know why their claims have not been paid. The system automatically informs them,” Mr. Duale said.

But hospital administrators paint a vastly different picture of a system that rejects claims without explanation, provides no mechanism for dispute resolution, and leaves facilities trapped in an information black hole.

“We don’t know why we haven’t been paid. I have duly filled the claim forms. I have followed up with SHA via email, and in person,” the Level 3A facility owner said. “When I get to their branch they say that they can’t see our attachments yet, on our end, all attachments are up to standard.”

The digital portal itself has become a source of frustration, with hospitals reporting that system changes occur without notice, sometimes rendering previously submitted claims inaccessible or incompatible with new requirements.

More alarmingly, the Rural and Urban Private Hospitals Association revealed that over 10,000 inpatient beds and 3,500 maternity beds have been mysteriously deleted from the SHA portal without explanation, despite hospitals holding valid licenses from the Kenya Medical Practitioners and Dentists Council.

“We are gravely concerned that facilities have had their bed capacity deleted and downgraded in the SHA portal despite having valid KMPDC licences,” Dr. Lishenga said.

For maternity cases, which form a substantial portion of claims at lower-level facilities, the verification process has descended into absurdity.

“For a maternity case for instance, we have even asked SHA officials to do the due diligence and call the women asking them if they delivered in our facilities,” the facility owner explained. “Instead, they are rejecting claims without verification or an explanation.”

Complicating the crisis is an aggressive government campaign against fraudulent SHA claims that has seen over 1,400 facilities shut down or suspended since the program’s inception.

In August 2025, CS Duale suspended 40 hospitals following a forensic audit, with an additional 45 facilities degazetted shortly thereafter. The crackdown uncovered ghost hospitals, inflated bed capacities, and fictitious claims totaling Sh10.6 billion.

The government’s determination to root out fraud, while necessary, has created a climate of fear and suspicion that hospital associations say is ensnaring legitimate providers alongside criminal operators.

“Any healthcare provider whose information is used to defraud SHA will be held personally liable,” Duale warned, adding that facilities would be surcharged to recover funds already paid on false claims.

The Kenya Association of Private Hospitals criticized the ministry for “weaponizing SHA fraud controls” and threatening closure rather than working collaboratively to resolve payment disputes with legitimate facilities.

The Auditor General’s March 2025 report revealed fundamental problems with SHA’s digital procurement process, including unbudgeted and non-competitive procurement, undefined scope of work, and questions about who actually owns the system being managed by a private consortium.

These systemic weaknesses have created an environment where the line between genuine claims and fraudulent ones has become hopelessly blurred, with hospital owners saying they are being punished for a broken system they did not create.

SHA has reportedly paid Sh50 billion of the Sh93 billion in claims submitted since October 2024, a payout ratio that hospital associations say demonstrates the fundamental insolvency of the scheme.

“This is a sign that SHA is not collecting enough money to reimburse hospitals,” Dr. Lishenga said, accusing the Ministry of Health of publishing misleading reimbursement figures without disclosing total claims submitted, approved claims, or actual payout ratios.

The financial gap is compounded by Sh33 billion in arrears inherited from the defunct National Hospital Insurance Fund, which remain unpaid more than five months after President William Ruto directed their settlement.

In counties where the government is piloting its digital healthcare superhighway program, including Mombasa, Kirinyaga, Embu and Nandi, facilities report persistent non-payment that has left them unable to participate in primary healthcare services.

A Parliamentary committee report in November 2025 documented 19 critical failures in the SHA system, including inconsistent reimbursements, biometric challenges for patients without national IDs, and the absence of a functional claims management office required under the Social Health Insurance Act.

The committee found that some facilities had received no disbursements whatsoever, while erroneous payments to others, including Sh16 million mistakenly sent to a private hospital instead of Nyeri County Referral Hospital, remain unrecovered.

Faced with financial annihilation, hospital associations have begun directing members to demand cash payment from patients, effectively undermining the entire premise of universal health coverage.

In September 2025, RUPHA issued a directive to over 700 member facilities to suspend SHA services and revert to out-of-pocket payments, describing the authority as “a bad borrower and a bad debtor.”

“We have proved that SHA is a bad borrower and a bad debtor. From today, all medical services at this facility for Social Health Authority beneficiaries will be offered on a cash basis unless otherwise stated,” the association’s notice read.

The Kenya Healthcare Federation took the extraordinary step of informing SHA that private hospitals would no longer treat civil servants unless they paid cash, following nine months of non-payment for services rendered to government employees and their families.

For patients like James Nyau, a road accident survivor requiring weekly physiotherapy, SHA membership has proven worthless despite being a fully paid member.

“Every week I pay Sh1,100 for a single physiotherapy session, plus other costs that SHA doesn’t cover. I’ve skipped sessions because of the cost,” Nyau said, highlighting the gap between SHA’s promised benefits and actual coverage.

Samuel Gitau, an Eastleigh resident, echoed the sentiment: “My son was unwell recently, and I had to pay Sh1,100 for his treatment. Sometimes, you just don’t have the money. Insurance could make a big difference, but right now, it doesn’t.”

Legal experts and civil society organizations warn that the SHA payment crisis represents a violation of multiple constitutional provisions and statutes.

Article 43 of the Constitution guarantees the right to the highest attainable standard of health, while Article 47 ensures the right to fair administrative action. The Fair Administrative Action Act requires reasons for all adverse decisions, while the Public Finance Management Act demands lawful and accountable use of public funds.

“By rejecting claims without explanation and withholding payments, SHA is breaching all these principles,” noted one civil society analysis of the crisis.

The High Court in May 2025 quashed CS Duale’s decision to form a committee to verify pending bills owed to hospitals by the defunct NHIF, ruling that the government’s delay tactics were unconstitutional.

Yet hospitals report that nothing has changed on the ground, with the payment freeze continuing unabated despite court orders and repeated government promises.

Hospital administrators and medical associations are united in their warning: without immediate intervention, Kenya’s healthcare system faces systemic collapse.

“No one is listening to healthcare providers. If this continues, there will be a crisis in the system soon,” the Level 3A facility owner said. “We feel like the government knows what they are doing.”

Dr. Lishenga was more direct: “Unless there is a substantial move to settle liabilities, we will move to out-of-pocket payment. We have no other way. How do we keep the facilities open? You cannot have three-quarters of hospitals that have not paid their workers for the last three months and expect that health care will be normal.”

The stakes extend beyond hospital finances to the very survival of patients who depend on private and faith-based facilities for care. With public hospitals already overwhelmed and understaffed, the closure or dysfunction of private facilities would trigger a healthcare emergency affecting millions of Kenyans.

As hospitals run on empty coffers and patients face impossible choices between bankruptcy and suffering, the promise of universal health coverage increasingly resembles a cruel deception rather than the transformational reform it was meant to be.

For the facility owner still negotiating with creditors over his remaining equipment, the future is measured in weeks, not months.

“I don’t know what I will do when they come again next month,” he said, his words a testament to the desperation that now defines healthcare delivery in President Ruto’s Kenya.

This publication reached out to CS Duale and SHA CEO Mercy Mwangangi for comment on the specific allegations raised by hospital owners, but neither had responded by the time of going to press.