Unravelling medical equipment leasing plan


Patients at a hospital in Nairobi. FILE PHOTO | NMG

The controversies surrounding the medical leasing equipment’s contract known as Managed Equipment Services will not be going away soon. It was initiated in 2015 with the national government contracting private firms to supply different sets of medical equipment in six key health care areas, namely, dialysis, emergency, maternal-child health, basic and advanced surgery, critical care, and imaging services in a seven-year leasing contract.

Despite the concept being a good initiative, its execution was terrible with taxpayers paying a heavy cost with their health.

Let us start with the good in the project. The nature of medical equipment is to perform diagnostic, therapeutic, corrective or monitoring intervention on behalf of the patient.

Therefore, it represents the beneficial characteristics of increased quality of service provision, timeliness of test results and treatments.

So, in this project, six different private firms were contracted to supply equipment’s to two hospitals per county and four national referral hospitals to scale up health infrastructure for provision of specialised medical care.

As an alternative to individual counties procuring the medical equipment individually, even though no county government can be able to afford to fully equip its hospitals with the all the needed medical equipment for the provision of specialised treatment, the counties pooled together to make the procurement of the medical equipment affordable.

So, the concept around a public-private leasing medical equipment was a good proposal because it’s a cost-effective way to obtain expensive equipment for specialised treatments.

Coming to the bad, private development of public infrastructure, which in this case is health infrastructure, is used to fill the gap left by budget shortfalls. But aligning the financial value interest of the private investor with that public interest outcome in this case quality health services to masses is where the rubber meets the road in the project design, and this has to be captured in a comprehensive feasibility study.

So, was a feasibility study conducted? There is no record in public domain of any feasibility study on the project.

Kenya’s healthcare nightmare is in primary healthcare provision and not in specialised treatments where we need heavy equipment.

So, investment in primary healthcare is where we will see much impact. Looking at the cost of the deal, there has been cost variations with the initial deal being Sh38 billion then adjusted to Sh45.9 billion and ended up to Sh63 billion after the Ministry of Health ordered for more equipment.

On the other hand, much of primary healthcare budget has remained the same with 80% still donor funded. Making matters worse, county governments have made it clear that they were never consulted in the project design.

Moving on to the ugly side of the deal, the Institute of Economic Affairs recently released report titled ‘‘Leasing of Medical Equipment Project in Kenya: Value for Money Assessment’’ provides a better understanding of the murkiness in the deal.

First is under-utilisation of the equipment. For example, at Kapenguria Referral Hospital the renal equipment was installed but has remained idle yet the county had 16,898 urinary tract infections in 2017 of which 95 percent were persons above five years of age.

Second is failure to deliver equipment despite counties making leasing remittances. For example, ICU equipment was not delivered to a county that doesn’t have ICU services.

Third is accountability challenge on who between the national or county governments should be audited. Audit findings show that the procurement of the medical equipment was done at national level, but counties have no information about procurement documents.

Lastly, payments for specific equipment have not been supported by relevant documentation that is necessary for conducting due diligence. The actual cost of the equipment could not be verified and neither is the actual amount paid to the suppliers, thus inhibiting determination of value for money. In addition, specific terms and conditions regarding the supply and payments have not been disclosed.