Health Cabinet Secretary Aden Duale has lifted the lid on how missing SHA funds worth Ksh11 billion vanished in just six months. Appearing before Parliament, Duale painted a picture of deep-rooted fraud, weak controls, and shocking abuse by medical facilities.
He said the Social Health Authority’s own AI fraud engine exposed massive manipulation of claims, fake patients, and inflated bills. The revelations raise hard questions about oversight, ownership of the system, and whether public health money is safe.
How CS Duale Says Missing SHA Funds Were Drained
Duale told MPs that systematic fraud, not accounting delays, explains the missing SHA funds. He said SHA rejected claims worth Ksh11 billion after its AI-driven fraud detection system flagged irregularities across the country.
The losses emerged within six months of SHA’s rollout. Duale said hospitals quickly adapted old NHIF fraud tactics to the new system. He warned that some facilities had already mastered how to steal from public health insurance long before SHA replaced NHIF.
The AI system reviewed claims in real time. It compared medical data against global standards and local rules. When facilities crossed obvious red lines, the system blocked payments automatically.
Duale said this process alone exposed how deeply fraud had penetrated the healthcare system.
Impossible Medical Claims Triggered Billions in Rejections
Duale shocked the committee when he revealed that some private hospitals reported impossible medical patterns. He said several facilities claimed that 100 percent of mothers delivered through caesarean section.
The World Health Organization recommends a C-section rate of between 10 and 15 per cent. Duale said any claim far beyond that range raised immediate red flags.
In Tharaka Nithi County, one private hospital claimed that all 500 mothers who delivered at the facility underwent caesarean sections. The system rejected every claim automatically.
Duale said other hospitals submitted maternity claims without mandatory birth notification documents. He stressed that hospitals must file these documents whenever a baby is born in a facility. SHA rejected such claims instantly, locking out billions of shillings.
The AI engine also flagged dialysis claims that exceeded medical standards. Duale said some facilities billed for 10 dialysis sessions per patient, yet SHA only covers two sessions based on approved treatment protocols.
He said these patterns explained why missing SHA funds kept rising instead of shrinking.
Fake Patients and Inside Jobs Deepen the Missing SHA Funds Crisis
Duale revealed even darker schemes behind the missing SHA funds. He said audits showed healthcare workers registered themselves as fake patients to generate claims.
Investigators also found ghost patients visiting primary healthcare facilities up to ten times a day in one county. These visits aimed to inflate capitation payments from the government.
In Kwale County, one patient registered 381 dependent children under a single SHA account. Duale said the Ministry handed the case to the Directorate of Criminal Investigations for prosecution.
The audit uncovered widespread forgery. Claim forms showed a single handwriting style and a single pen. The law requires signatures from patients, doctors, and hospital administrators. Duale said SHA rejected any claim that failed this test.
He told MPs that such crude fraud pointed to organized networks inside facilities rather than isolated mistakes.
Ownership Gaps and Weak Oversight Raise Alarms
Duale admitted that governance gaps worsened the Missing SHA Funds problem. Auditor General Nancy Gathungu found that a private consortium allegedly linked to an Indian firm controls SHA’s core system.
The consortium expects to collect about Ksh11 billion every year from member contributions and hospital claims. Yet the government does not fully own the Ksh104 billion system.
Duale said this structure limits state control and raises accountability concerns. He said the ministry now faces pressure to secure full ownership and tighten oversight.
SHA has issued a 15-day ultimatum to hospitals to explain Ksh3 billion in flagged claims. Facilities must submit missing documents or face permanent rejection.
The Ministry of Health says it has already paid Ksh11.4 billion to hospitals since SHA began operations. However, private hospitals under RUPHA claim SHA owes them Ksh76 billion, a dispute that continues to fuel tension.
Duale defended the AI system. He said it works in real time and protects public funds better than NHIF ever did. He insisted that the rejected billions do not represent lost money but blocked theft.
Still, the scale of the missing SHA funds exposes painful truths. Fraud remains deeply embedded. Oversight remains weak. And without urgent reforms, Duale warned, criminals will keep testing the system.
