Day of long knives at NHIF as row rages over use of funds

Medical Services minister Anyang Nyong’o on Thursday suspended Richard Muga as chairman at the National Hospital Insurance Fund in a day-long drama that also saw the fund’s chief executive, Richard Kerich, reinstated just hours after he had been suspended.

Dr Muga’s suspension came hours after he had sent Mr Kerich on compulsory leave pending investigations into alleged irregular selection of healthcare facilities to provide medical services in NHIF’s expanded scheme.

Prof Nyong’o said that Dr Muga had overstepped his mandate in sending Mr Kerich home and that his actions amounted to insurbordination.

“Your action is a breach of protocol and insubordination to me as the Minister for Medical Services,” Prof Nyong’o said in a letter to Dr Muga. “I have decided to suspend you as the chairman of the NHIF board with immediate effect.”

Prof Nyong’o’s letter effectively annulled the suspension of Mr Kerich and four other senior officials whom Dr Muga said had been involved in paying for services that were never delivered because the healthcare facilities did not exist.

The claims that the fund had paid a service provider millions of shillings for non-existent facilities were made on Tuesday during a parliamentary committee hearing.

READ: NHIF paid Sh30m to non-existent clinics, House committee concludes

The drama began during a stormy board meeting on Thursday when five of the members present walked out on Dr Muga - who had sought authority of the directors to suspend top NHIF management to allow investigations on irregular payments.

Dr Muga claimed that suspending the top management was urgent to protect members’ premiums.

“I am mandated to protect public funds at NHIF as the chairman and I cannot sit back as suspicious dealings go on unchecked,” said Dr Muga after suspending Mr Kerich, adding that only the President had the power to sack him as chairman.

Dr Muga was reacting to findings by a parliamentary committee on health which found out that over Sh30 million had been paid to six clinics under the Meridian brand on March 8, more than three weeks before they were established.

He further claimed that several healthcare providers had been irregularly selected to offer services while they did not meet the minimum requirements set for a clinic to qualify as an outlet for NHIF members.

The minister reversal of Dr Muga’s action heightens the confusion at the public health insurer which has in the recent past been dogged by claims of mismanagement of funds.

The drama started during the board meeting where the majority of led by William Sossion, the vice chairman, walked out of the chairman insisting that all the transactions were above board.

“All proposals presented by the chairman were rejected and we believe his actions are borne out of self-interest,” said Mr Sossion who is also the chairman of the Kenya National Union of Teachers (Knut).

Benson Okwaro, the deputy secretary general at the Central Organisation of Trade Unions (COTU) said that NHIF’s board was not sincere in executing their duty to protect contributors because of vested interests.

“There is need to probe these transactions the chairman is talking about because they involve millions of taxpayers’ money,” said Mr Okwaro – the only board member who supported the chairman.

“I am sure all board members know that there is a big problem in this fund — NHIF’s actions are being questioned everywhere.”

Mr Okwaro added that Cotu had resisted higher monthly contributions from workers because NHIF did not have the capacity to deliver the kind of medical cover it promises members.

The Parliamentary Health Committee has termed the offshore ownership of Clinix Healthcare Limited as an “Angloleasing-styled corruption scheme” even as it emerged that NHIF paid Sh91.3 million to outlets that did not existent at the time the facility was awarded a contract under the NHIF civil servants medical scheme.

Records tabled before the House committee show that Clinix has 71 clinics countrywide, 49 of which were opened after the healthcare firm had signed a contract with NHIF to provide outpatient services under the civil servants scheme. Some 28 new outlets were established between April and May 2.

Documents presented before the committee by the hospital chain show that Clinix Healthcare is owned 99 per cent by Antony Chako through Pharma Investment which is incorporated in the British Virgin Island, described by the team as “one of the world’s most notorious financial secrecy jurisdictions and tax havens”.

The remaining one per cent is held by Jiwan Dabral through Beneficial Ltd which is registered in Kenya.

Further, the committee concluded that the hospital chain lacks the human resource and technical capacity to provide healthcare services to the 56,747 principal members who chose the hospital chain as their preferred medical services provider under the state funded scheme for all public servants after a preliminary site visit to its Sameer and Daystar Athi River clinics.

“We know that Mr Jayesh Saini, of Clinix Healthcare and Nairobi West Hospital is the brainchild behind this new fraud being done under Clinix,” said Dr Robert Monda, the Health Committee chairman.

“Information we have from the registrar of the Medical Practitioners and Dentists Board indicates you have seven doctors registered by the statutory body,” he added.

A list of funds disbursed to health facilities for the period between January and March under the capitation scheme shows Clinix Healthcare Eldoret ‘B’ as having received Sh4,075,830 yet the facility was licensed to begin operations on March 16. “Allocations were given to ghost clinics and this constitutes fraud,” said Dr Monda.

Clinix CEO Zac Madana told members of the Health Committee that the firm received Sh202,161,137.50 from NHIF on March 13 as capitation for January to March, the first quarter.

“It costs an estimated Sh10 million to set up a clinic. It is not true that we are funding our expansion from the NHIF earnings,” said Mr Madana when he testified under oath before the Health Committee.

The Clinix boss said the firm has invested more than Sh700 million in its 71 facilities countrywide and is awaiting clearance from the Medical Practitioners and Dentists Board to open 28 more branches.

“We have signed contracts with third party providers to offer healthcare services to our clients on our behalf in areas where we do not have operations,” said the Clinix CEO.

However, the Health Committee chairman Robert Monda said that the real face behind the healthcare enterprise is Mr Jayesh Saini, associated with Nairobi West Hospital.