More private hospitals face probe over medical bills fraud

Nairobi Women’s Hospital
The Nairobi Women’s Hospital. FILE PHOTO | NMG 

More private hospitals risk being put under increased scrutiny over inflated medical bills in extended investigations as insurance firms move to blacklist additional health institutions believed to be engaging in fraud.

The Association of Kenya Insurers (AKI) —the insurers’ lobby group — will on Thursday morning announce a decision to review the pricing of bills at a number of undisclosed hospitals in the wake of revelations that the Nairobi Women’s Hospital had inflated bills to optimise profits.

More than a dozen insurance firms cut links with the hospital after it emerged that executives at the institution had set daily targets, sometimes making inpatients stay longer than was necessary in order to accumulate higher bills.

AKI now says that the malpractice extends beyond one hospital and that it will investigate other top private hospitals.

The health insurers say that falsified claims and the high cost of drugs prescribed by doctors have pushed the majority of medical cover providers into losses, putting the stability of the industry in jeopardy. This is reflected in Kenya’s booming private healthcare sector that is driven by increased demand for their services amid underfunding of the public health sector.


Earnings in the sector have attracted private equity funds, which seek profitable sectors to invest in for guaranteed returns.

“The rot must be beyond just one hospital. We are having a meeting tomorrow with a view to addressing the bigger issue. We know most of the things Nairobi Women’s has been accused of are happening in many other hospitals,” AKI chief executive Tom Gichuhi said in an interview with the Business Daily on Wednesday.

Mr Gichuhi said all medical insurers and underwriters are now willing to take punitive measures against hospitals inflating costs or engaging in fraud.

“We want to come up with a broader strategic direction on how we engage service providers going forward. If we find those who can’t reform, we will not fall short of taking the punitive action of blacklisting them.”

Being blacklisted will hurt errant hospitals given that the bulk of patients who incur high costs of treatments tend to use insurance covers to settle bills.

Medical insurance is the second-largest class of short-term insurance business after motor insurance in terms of gross written premium.

However, rising insurance claims have condemned the class into years of losses, driven by high doctors’ fees and cost of drugs.

Medical insurance firms have accused doctors of engaging in fraud by colluding with pharmaceutical firms to fleece health insurers whose underwriting losses doubled to Sh1.1 billion in 2018 compared to a year earlier.

Only six medical insurers posted a profit during this period, underlining the burden of rising medical bills.

Jubilee Insurance, the best-performing insurer in 2018-2019, last year estimated that Kenyans were paying at least 50 percent more for their medications due to over-prescription of branded drugs as opposed to the use of less expensive but equally effective generic drugs.

“In Kenya, we are using more brands than generics yet economies like the US use 80 percent generics despite being richer than us. Doctors, patients and hospitals are united to exploit us,” said Jubilee chairman Nizar Juma.

Medical insurers have also been at a crossroads with hospitals over the number of tests administered to patients, the use of expensive branded drugs as well as opting for expensive procedures such as caesarean delivery.

Pharmaceutical Society of Kenya president Louis Somoni Machogu estimated that last year medicines accounted for between 40 percent and 70 percent of inpatient and outpatient care respectively.

He said most customers holding insurance covers deplete their benefits before their policy period has expired.

“There is need to have drug-focused interventions to save costs by adopting best practices in disease diagnosis and prescription by doctors, drug selection and review by pharmacists and compliance and utilisation patients,” he said. But doctors are reluctantly arguing that the Kenyan market is porous and therefore some of the generic drugs are not up to the required standards.