Sh38 billion leased medical equipment project in limbo

Medical equipment

Then President Uhuru Kenyatta and Deputy President William Ruto receive medical equipment procured through the Managed Equipment Services (MES) Project at State House, Nairobi on February 6, 2015. Also present was then Health Cabinet Secretary James Macharia, Director of Medical Services Dr Nicholas Muraguri and Mr Cheng Minghe of Mindray Megascope Health Care.

Photo credit: File | Nation Media Group

The fate of the Sh38 billion controversial medical equipment leasing project now lies in limbo after the national government directed the counties to engage the contractors directly and enter into individual deals.

In about 20 requests seen by the Sunday Nation written to different suppliers, among them General Electricals East Africa Services Limited, Esteem Industries Ltd, and BellCo. Srl, the counties are requesting a consultation meeting with the suppliers.

In three of the letters written last week, the counties say the lease agreement has come to an end and they have been instructed by the national government to engage the suppliers individually. “The purpose of this letter, therefore, is to invite you for consultations next week on April 25, in our board room,” says the letter to GE written by the counties.

Even as the counties engage the contractors, some of them have vowed to sue the national government for breaching the contract and bringing in a clause not in the initial contract. They argue that the contract was signed between the national government and the suppliers, and not the counties, adding that with the new agreement, they foresee the project collapsing.

In a letter by one of the contractors written to the Principal Secretary this month, they requested the ministry to regularise the MES contract to enable the provision of healthcare services and achieve the Universal Health Coverage goal. “We may not be able to proceed offering services beyond April 20, unless the extension addendum is signed to enable us to acquire a bank credit facility,” says the letter.

Last year after most of the bits of the contract expired and a survey was done, county bosses and then Health CS Mutahi Kagwe agreed that many Kenyans needed the services. The contract for Mindray Biomedical of China ended on December 2, 2022, that for Esteem from India on December 31, 2022, Philips from the Netherlands on April 1, 2023, General Electric (GE) from the USA on April 8, 2023, and Bellco SRL’s from Italy on May 25, 2023.

Mindray Company won the tender for supplying theatre equipment and General Electric won the tender for supplying cancer and radiology equipment. They were charged with the responsibility of installing medical equipment in county hospitals and ensuring they work optimally.

The government was left with the responsibility of ensuring that they pay them for the services delivered by the equipment.

Based on the contract signed between the national government and the counties, the suppliers were to train personnel, technicians and biomedical engineers in how to handle, maintain and repair the equipment.

Initial contract

The initial contract—agreed upon between the national government and the contractor—stated that after the seven-year contract of the initial project, the government had three options, chief among them extending it by three years. Another option was to buy out the equipment at the rate at which the contractors bought from the manufacturers—matched dollar for dollar—an option the government considered too expensive.

The third was to ask the contractors to decommission the equipment from the facilities. The national government settled on the first option and extended the programme by three years. This meant the two other options were voided immediately.

On August 3, 2022, the Ministry of Health, in a letter to the contractors, communicated this, indicating that they were extending the programme and they should be ready to offer services.

They had another meeting in November at Afya House, Nairobi, and agreed that an extension would be communicated to the contractors for continuity.

“With that, we were sure that the project was going to extend and we commenced to manufacture equipment and the surgical instruments, which were ready by the beginning of this year,” says one of the contractors who sought anonymity.

He said without a contract, “it becomes difficult to implement the programme as we are not aware of our fate.”

“I want to be so frank with you. This agreement was between the national government and the contractors and there is an amount we agreed on. Since the value was decided based on a group of counties, how do we get into an agreement with individual counties? What criteria are we going to use to come up with the amount they should pay per month?” the contractor asked.

He asked whether all the counties will go in that direction.

The multibillion-shilling plan launched in February 2015 was to meet the country’s need for accessible and affordable specialised healthcare. It came with the promise of bringing specialised healthcare services closer to the people. The equipment was distributed to 98 hospitals, two per county, plus four national referral facilities.

Counties got kidney dialysis machines, ultrasounds, state-of-the-art theatre facilities, intensive care units, incinerators, sterilising units complete with surgical sets and assorted cancer treatment machines.

Through the project, Kenyans have prompt access to state-of-the-art diagnostic and patient care equipment and specialised services uninterrupted. The fully-fledged low-cost diagnostic centres, screening and treatment facilities have been established in 98 hospitals to enable persons with chronic conditions to easily access services at the grassroots level to decongest national referral hospital

According to the data seen by the Sunday Nation since the inception of the project in 2021, about 628,821 Kenyans have been attended to in various theatres, with 385,587 receiving dialysis and 7,472 receiving services in the intensive care unit.

Other services include ultrasound (1.8 million Kenyans), X-ray (3.9 million), Mammogram (40,840 people), OPG (Orthopantomogram) X-ray of the upper and lower jaw (91,083), with a C-Arm machine attending to 19,866 Kenyans as of 2021.

With the number of Kenyans in need of the services increasing, is it viable to hand over the project to the counties to engage the contractors? How does that threaten the continuity of the project? With the dropping of the centralised contract, will services be affected? Will the counties get more funding from the national government for the project?

Health CS Susan Nakhumicha is on record saying leasing the equipment is the best way to go.

“As a government, we are in the business of providing service and not owning machines and equipment. We are reviewing the contracts. We are moving into the maintenance and service phase where we will be paying less,” she said in an earlier interview.

Council of Governors Health Committee chairperson Muthomi Njuki said it was necessary to sign the contracts but with a review of the programme to address “equity concerns”.

The county chief indicated that the turnaround time for servicing the machines has been a major issue.

On whether MES is necessary for the counties and Kenyans, Mr Njuki said the machines had saved many lives.

“None of the counties can afford to buy the equipment by themselves, they are expensive and the only ask we have as we sign the agreement is the reduction in the pricing of commodities and the service time,” he said.

Talking to the Sunday Nation, one of the governors who said he will be victimized for talking to the media and sought anonymity said the signing of the county-specific contract with contractors is a dead deal on arrival.

“Let me tell you, there is a belief that this was a political project and there is an assumption that the former president was a beneficiary of the project. The new government are not ready to get into a deal with the contractors that’s why they are pushing it to counties,” said the governor.

He argues that instead of putting the interest of Kenyans who have benefited from the project, politics is being played.

“If you ask me, this was a good project but not handled well, a county whose residents have fully benefited from the project, I will not engage the contractors on an individual basis, let the national government continue with the project till the end. Does it mean that if a new government comes in, they drop viable projects from the last regime,” he asked.