How counties new medical equipment will be bankrolled

President Ruto flags off the delivery of 14 CT scanners, two ultrasound machines, 30 dialysis machines and digital X-ray systems to various hospitals in the counties on August 7 /PCS

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Up to 90 per cent of the fees counties collect from patients for using medical equipment supplied under the new National Equipment Service Project will go to the vendors.

President William Ruto launched NESP to replace the controversial Managed Equipment Service scheme, which Parliament condemned as exploitative and conceived as a “criminal enterprise.”

The Star has established that counties, vendors and the Social Health Authority have signed a seven-year tripartite agreement under which counties will pay for the equipment – through SHA—based on actual usage.

In this fee-for-service arrangement, praised by governors but seen by critics as resembling MES, counties will retain only 10 per cent of revenues from patients’ use of the equipment.

“NESP is like a service contract and partnership where you share proceeds between the vendor and the county. In this case, the vendor is taking nearly 90 per cent,” Makueni Governor Mutula Kilonzo Jr said.

Under the deal, county governments bill SHA for services delivered using the equipment. The vendors supply, install, maintain and upgrade the machines at no upfront cost to counties.

“The vendor comes and places the machines. It is envisioned that when people are being dialysed, they are under the SHA, so the SHA pays us,” Mutula said.

“Once they pay us, we pay a certain amount for that machine. Ideally, somebody should look at it from the perspective of the service,” he added.

The list of equipment includes CT scanners, ultrasound machines, dialysis units, renal machines and digital X-ray systems.

Council of Governors chair Ahmed Abdullahi defended the formula, saying the tariffs were thoroughly negotiated to cover equipment supply, maintenance and consumables.

“These were negotiated tariffs between what the vendor takes for the supply of the equipment, which also includes maintenance of the equipment and consumables,” Abdullahi said.

Counties, he noted, provide personnel, installation space and utilities such as electricity and water.

Billing is done at the facility level by medical staff, with the information relayed to SHA. The process is automated—the equipment has in-built meters to track usage.

This model differs from MES, which required counties to pay Sh200 million annually to vendors, deducted directly by the Ministry of Health through conditional grants.

Critics of MES argued that it involved coercion, lacked feasibility studies and often resulted in unused equipment due to missing infrastructure or skilled staff.

"Under MES, it was total coercion. No feasibility studies were done. The equipment were dumped there. There was no consultation," Mutula said.

He added, “Under MES, we used to pay for maintenance and consumables. But in this new programme, all that is done by the vendor.”

Abdullahi said 45 of the 47 governors have already signed up and that participation was voluntary.

“There is still an opportunity for the remaining two counties to sign. This was a voluntary process. It was not a requirement for any county to sign up,” he said.

The Wajir governor described the programme as a game changer in the provision of health services in public hospitals, saying that no single county can procure the health machines directly from its budget.

“This is a classic case of conceptualisation of a good idea between the counties and the national government, which leverages private sector resources to deliver services to the people,” he said.

Launching the programme at State House, Nairobi, two weeks ago, President Ruto said, “Our private sector partners will bear the cost of installation, servicing and maintenance, placing no financial burden on public health facilities.”

He called NESP a cost-effective alternative to MES, eliminating large upfront costs and ensuring consistent maintenance to guarantee continuous service.

Through the new programme, the President said Kenya is shifting from a fragmented and costly medical equipment supply system to a smart and collaborative approach to healthcare delivery.

“This cost-effective and sustainable model guarantees that equipment is not only installed, but also consistently maintained, thereby ensuring continuous and reliable service,” he said.

Ruto flagged off the delivery of 14 CT scanners, two ultrasound machines, 30 dialysis machines and several digital X-ray systems to counties.

Within two months, the government expects to deploy an additional 58 digital X-rays, 65 ultrasound machines, 19 CT scanners, 100 theatre units and 100 laboratory systems.

The Ministry of Health says NESP is built on lessons from MES and aims to provide equitable access to modern medical equipment across Kenya.

The MES programme, launched under the previous administration, was heavily criticised.

Governors lamented that they were coerced into signing contracts without being consulted on the specific needs of their facilities.

As a result, much of the equipment delivered under MES remained unused due to a lack of infrastructure, electricity or trained personnel.

“We signed it under duress because the pressure was too much. When I signed it, I didn’t even want to read it because the equipment was already there—they were delivered on a Saturday night,” former Kakamega Governor Wycliffe Oparanya said.

The Star established that the MES equipment, some of them now obsolete, is still choking county hospitals with governors grappling to dispose of them.

For the few functional ones, the counties have been forced to factor their maintenance cost into their budgets.

However, the counties are no longer paying the contractors for the equipment after the contracts ended.

The Ministry of Health states that it is designed to provide consistent access to medical equipment nationwide, building on lessons learned from MES.

INSTANT ANALYSIS

Under the FFS model, suppliers invest in and place medical equipment in county health facilities at no upfront cost, then receive payment based on services delivered. SHA reimburses facilities according to gazetted tariffs. This approach enables counties to focus resources on patient care while vendors handle supply, maintenance and upgrades. The new programme replaces the Medical Equipment Scheme, which required significant upfront capital and lacked clear service agreements, leading to frequent downtimes and compromised care.