Hospital charges have become the main financial lifeline for counties, even as unpaid bills from the national health insurer continue to strain the health sector.
A report by Controller of Budget Margaret Nyakang’o shows that collections from Facility Improvement Financing (FIF) helped keep county hospitals afloat, surpassing targets by a wide margin.
“The collections received from FIF, totalling Sh24.59 billion, outperformed the annual target of Sh20.77 billion, achieving 118 per cent,” Nyakang’o notes in the 2025 review.
The FIF kitty, drawn directly from payments for services such as laboratory tests and pharmacy sales, is retained and spent at the facility level to cover daily running costs, staff management and capital investments.
Nairobi alone earned Sh1.4 billion, despite not including the revenue stream in its projections. Governor Johnson Sakaja linked the improved performance to changes in hospital governance.
“We restructured the board membership and created the position of CEO above the medical superintendent,” he said.
“There has been exceptional transformation in Level V hospitals, with service delivery improving significantly.”
Across the country, at least 12 counties surpassed their annual targets. Kisii led the group with collections of Sh982 million, representing 178 per cent of its target, while Mandera and Wajir both reached 123 per cent.
Kirinyaga nearly doubled its target of Sh218 million to collect Sh431.52 million, marking 122 per cent achievement. Other counties that went beyond expectations included Garissa at 120 per cent, Homa Bay at 101 per cent and Meru at 106 per cent.
Homa Bay collected Sh1 billion from health services, helping it raise Sh1.5 billion in own-source revenue. Kiambu brought in Sh1.8 billion, Kisumu Sh1.6 billion and Nakuru Sh1.8 billion. Kakamega collected Sh894 million, Bungoma Sh663 million, Makueni Sh773 million, Nyeri Sh769 million and Meru Sh758 million.
But the County Budget Implementation Review Report flagged wide gaps in how counties are managing the funds, warning of heavy dependence on hospital collections.
The Controller of Budget noted that in many devolved units, FIF made up more than half of all local revenues. In Nairobi, health-generated income accounted for 66 per cent of the county’s total target, showing how central hospital charges have become to county finances.
