Inside multi-billion-shilling tender eating up Nairobi Hospital

A botched billion-shilling ICT contract, protracted leadership disputes, allegations of financial mismanagement and an unresolved murder are at the heart of a complex web engulfing one of Kenya’s top medical institutions. 

Rival factions are battling for control over lucrative contracts and influence at Nairobi Hospital as the image of the leading healthcare provider comes under the spotlight.

The power struggles, some experts warn, threaten to undermine the government’s efforts to achieve universal health coverage, given the critical role the private sector plays in the healthcare system.

.

Keep Reading business

•  US Fed rate cut: Why it matters to Kenya, the world Premium
•  Debate on diaspora bond sparks mixed reactions among Kenyans
•  End of an era as Mastermind Tobacco to go under the hammer
•  Irony of lowest inflation in 17 years but Kenyans barely making ends meet
•  2024: Year of layoffs as businesses struggle to stay afloat

The tender took a darker turn at the height of the power struggles. An accountant whose career was starting to take off, Eric Maigo, 36, was killed in his prime in unclear circumstances.

Today marks exactly one year since his life was snuffed out on September 25, 2023. His killers are still at large.

The body of Maigo, who had been acting as the hospital’s finance director, was found at his residence in Nairobi, having been stabbed 25 times in the chest, neck and face.

Maigo had been an integral part of the team evaluating the tender submissions, and his killing sent shockwaves through the hospital.

While the police have yet to unravel his death, there were suspicions that it could have been linked to his involvement in the tender process.

According to sources close to his family, the accountant had expressed concerns about his work in the weeks before his death. He reportedly told his colleagues and family that he had been pressured to approve documents related to the tender, but he had declined.

“He was a man of integrity,” one of his colleagues said. “He wouldn’t compromise his values, which may have cost him his life.”

Maigo’s killing is just one of several troubling incidents that have cast a long shadow over The Nairobi Hospital in recent months.

The divisions within the hospital’s leadership have only deepened since his death, with two rival factions fighting for control of the hospital’s operations.

A section of the Kenya Hospital Association (KHA), the body that owns the hospital and calls itself “progressive members”, has mobilised and signed a petition to recall the current board chaired by Chris Bichage and deputised by former Permanent Secretary Philemon Mwaisaka over how the contract was handled.  

New system

The disgruntled KHA doctors recently issued a strike notice and called for an extraordinary general meeting on September 18, 2024, which was later stopped by a court order obtained by the current management board.

Currently, The Nairobi Hospital uses an ICT system called Kranium, which the management says is dogged with massive failures that have led to huge financial losses for the institution and, therefore, needed replacement.

“There are valid reasons why we need to change our systems. The current system has subjected us to huge losses running into millions of shillings and we need to change it. However, we have insisted that the right procedures must be followed. And that is why they are fighting us. We have cut all the channels to defraud the hospital,” said James Nyamongo, the hospital’s chief executive officer.

While the current board’s decision to cancel the original ICT tender has been met with approval from some quarters, it has also sparked a legal battle. 

GoodX, the South African firm that partnered with Dynamics NAV to implement the system, is now pursuing arbitration, demanding more than Sh200 million in compensation. 

In their defence, GoodX argued that the hospital’s leadership breached the contract by abruptly terminating it without cause.

GoodX had jointly bid with Dynamics NAV in November 2021 to develop an integrated ICT system that would operate various functions and units of the hospital, including the critical function of management of patient data.

On May 29, 2023, Ernst and Young (EY), an audit firm, however, poured cold water on the process and cited several profligacies, among them that the system proposed by the duo had not demonstrated evidence of where it had worked before in a complex hospital environment and therefore ill-suited for Nairobi.

The audit showed that Dynamics NAV/GoodX was not among the initial seven shortlisted firms that would be considered for evaluation in an exercise concluded on March 22, 2022.

Later, a project implementation committee reviewed the evaluation report and it was at that point that Dynamics NAV/ GoodX was included for consideration.

KHA group questioned how the consortium was included and made the final shortlist. They questioned the role of the board of management, and called for the resignation of the members.

“Some board members in the previous board would rather die protecting the award. What is their interest? But even with the new board and a new process, the situation is no better,” claimed a doctor at the facility.

Initially, a restricted tender released on April 22, 2022, shortlisted four bidders and closed on May 27, 2022. Four bidders that made the cut to proceed included Asseco Poland/Once Connect, ICT Health Solutions, Converge Solutions Limited and Dynamics NAV Investments Limited.

Dynamics NAV Investments won the initial tender bid, and to execute the contract, they partnered with South African company GoodX for a joint venture. 

Audit findings

After the award, an independent review by Ernst and Young found that Dynamics NAV/GoodX did not exhibit the capacity to deliver on the required ICT solutions, and the tender had been overpriced.

Additionally, Dynamics NAV did not provide a performance guarantee specified in the contract as five per cent of the total contract sum for contractual and financial security before implementation of the contract.

Performance guarantee is a fraction of the contract sum provided for contractual assurance and financial security on the contractor’s part to execute the won tender. 

“Dynamics NAV/ GoodX presented a pair of systems which are not integrated, which is likely to create similar problems experienced with the current system,” the report by Ernst and Young read in part.

Documents seen by The Standard show that out of the final list of four firms, Indonesia’s ICT Health got the highest score in technical and financial evaluation.

ICT Health had quoted the lowest at $3.9 million, while Dynamics NAV/GoodX had quoted $8.5 million.

“Dynamics NAV did not pass the test but was pushed through in contravention of procurement guidelines. The only way to protect the hospital’s interests was to terminate it,” Nyamongo explains.

Over the years, Nairobi Hospital, a premier medical institution now at 70, has built a solid reputation with one of the most modern high technology and a bed capacity of more than 400. The hospital boasts of having some of the country’s top specialists and physicians, with over 600 specialists housed under one roof, one of the highest in the continent in a single facility, becoming an obvious choice for high-profile patients, including heads of state.

Recently, the hospital won a global award for its outstanding leadership in the region’s healthcare, awarded by the European Society for Quality Research.

“During my tenure, we have won some notable 30 awards and this continues to show our longstanding reputation in offering world-class healthcare. We cannot allow a few individuals to taint the hospital’s reputation,” said Nyamongo.

The hospital currently has more than 3,000 members, and the hospital’s board of management is responsible for its corporate governance and is accountable to KHA.

“This hospital used to be a trailblazer but they are slowly losing it. We are standing up against these injustices to save this hospital,” says David Otieno, of the “progressive” team.

The current management board is chaired by Dr Bichage, a former MP, economist and governance expert, and deputised by long-serving civil servant and former Principal Secretary Mwaisaka.

The board of 10 is a mix of medics and other professionals. It includes retired judge Philip Waki, university don Herman Manyora, paediatric surgeon Dr Fred Kambuni, Dr Magdalene Muthoka, Dr Mbira Gikonyo, Dr Barcley Onyambu, Prof John Mwero and Geoffrey Ng’etich.

“When we came into office, we found this ICT issue on the table, and when we consulted, we realised that if it was to be implemented, it was going to be disastrous. We canceled it. I can confidently say that we did the right thing for KHA, the public and the good of this great institution,” said Dr Bichage.

The previous board was chaired by Dr Irungu Ndirangu, an ear, nose and throat (ENT) surgeon, while Bichage deputised him.

“Dr Bichage was part of the board that okayed the previous contract. This is why we are calling for a clean-up,” said Dr Edwin Rono, one of the dissenting doctors.

“This hospital has a rich history. We must save its reputation and what we need is a proper forensic audit conducted by an international body that can restore sanity,” said Dr JD Patel, who is part of the team.

“The staff are demoralised. There used to be ‘midnight lunch’ for doctors working late, but that’s gone. Today, there are no locums, and morale is completely depleted. Some of us who were suspended are not receiving payments,” said Dr Frank Mwongera. 

The process to have fresh bids kicked off despite the opposing faction obtaining court injunctions against it and currently, four firms are squaring it out for the grand prize.

Those on the opposite side planning the takeover in the board of management include Dr Luke Musau, Miller Bwire, Martha Loeffler, Nguru Wachira, Dr David Otieno, Dr Edwin Rono, Ludmilla Shitaka and Charles Wambugu.

The Standard has obtained documents of the controversial multi-billion shilling ICT deal signed on August 15, 2023, between the hospital, Dynamics NAV Systems Ltd and GoodX Enterprises.

Nyamongo, whose term ends this year, said there were no strikes or go slow at the giant facility as purported by the other faction.

“The admitting doctors with rights to work here are not forced to accept patients here. They have a choice to admit elsewhere, so the issues of doctors going on strike do not arise. We have an upcoming AGM. If any of the members are dissatisfied, they should wait for that time to air their grievances and make their position known. Why do they fear to follow clear processes,” he said.

Terminating the contract for the supply, implementation, maintenance and support of Enterprise Resource Planning (ERP) and Hospital Management Information System (HMIS), the hospital management insists was in the facility’s best interests.

Site visit

“It is important to mention that the canceled procurement process of HMIS and ERP earlier this year was due to non-compliance with contract terms as enshrined in the Procurement Policy,” Bichage said.

A site visit was made to Dynamics NAV/GoodX Enterprises Pty Ltd in Pretoria, South Africa, in September 2022. Another was made a month later to ICT Health Solutions in Jakarta, Indonesia, to assess the two firms’ capacity to deliver the mega project and whether they had handled such work for a hospital comparable to the size of Nairobi Hospital.

The site visit to Zuid Afrikaans Hospital in Pretoria established that the GoodX web system by Dynamic NAV lacked some crucial modules and functions that would warrant some manual operations cited as ones that would potentially result in errors during data entry and reconciliation. Additionally, the site visit found that the Zuid Afrikaans Hospital’s 181-bed capacity was not comparable to Nairobi Hospital, which has a higher capacity.

The South African firm needed to demonstrate a site that they had successfully implemented an enterprise resource planning system.

In a communication to admitting doctors, Nyamongo says the ICT health solutions system was the best bet for the facility.