Why Nairobi Hospital is in battle for survival

The Nairobi Hospital, one of the country’s most iconic medical institutions, could shut its doors this week following a creditor’s petition seeking its liquidation. 

The case, set for a hearing at the High Court’s Commercial and Tax Division on Wednesday, August 13, 2025, at 9 am, threatens to bring down the private healthcare giant that has served Kenyans and the East African region for over 70 years.

What started as a quiet boardroom dispute over a multimillion-shilling loan has escalated into a full-blown crisis, marked by allegations of financial mismanagement, rising treatment costs, suspended insurance services, and legal battles that risk ending the hospital’s storied legacy.

Nestled in the leafy side of Nairobi, the hospital has treated heads of state, foreign dignitaries, celebrities and prominent business leaders.

Founded in 1954, it quickly grew to become a premier referral hospital offering specialised medical services to Kenyans and Eastern Region.

But that lustrous image is showing cracks. Accusations of mismanagement, questions about governance, and deep factional divisions have created a cloud over its future.

For an institution whose greatest asset has always been its reputation, the stakes could not be higher.

The hospital now faces the very real possibility of liquidation following a petition by Opticom K. Limited, a creditor alleging unpaid debts and insolvency.  

The petition is demanding the winding up of the Kenya Hospital Association (KHA), the entity behind the hospital. 

The bombshell

The bombshell was quietly dropped in Gazette Notice No. 11113, dated August 5, 2025.

Opticom K. Limited, a little-known company with apparent contractual ties to the hospital, filed for compulsory liquidation under the Insolvency Act (No. 18 of 2015).

The company, represented by C.M. Advocates LLP, alleges that Nairobi Hospital owes it a debt, an amount yet to be disclosed, which it can no longer ignore.  

“The liquidation petition will be heard on Wednesday. Any person desirous to support or oppose the making of an order for liquidation may appear at the time for hearing in person or by their advocate for that purpose and a copy of the petition will be furnished by the undersigned or the court’s registry to any person requiring such a copy on payment of the regulated charge of the same,” reads the notice.  

The case, listed as Insolvency Cause No. E133 of 2024 will come up for a case management conference at the Milimani High Court on August 13, where the Hospital’s future may hang in the balance.

If court agrees with the petitioner’s argument, the hospital could face liquidation, a potential death knell for the 71-year-old facility.

“If the petition succeeds, the court could place the hospital under official receivership or order the appointment of a liquidator,” explained lawyer Cyrus Mwaniki, an expert in corporate restructuring.

“That would paralyse Nairobi Hospital operations and open the door to asset sales, loss of jobs of over 1,000 employees, patient displacement, and a serious blow to investor and public confidence in private healthcare institutions in the country,” Mwaniki stated.

According to insiders, the Gazette Notice, which formally publicised the request to place The Nairobi Hospital under liquidation, has sent fears throughout the institution’s stakeholder ecosystem. 

Vendors, creditors, service providers, and medical partners are now reportedly reconsidering their contracts, fearing they may not be paid if the liquidation proceeds. 

At least eight major insurers have confirmed that they had suspended Nairobi Hospital from their panels, citing concerns over cost escalations as the reason for suspending their services from today.

The eight companies include Madison Insurance, First Assurance, Minet, Old Mutual, Britam, AAR, CIC, and Pacis Insurance.

AAR Insurance noted that the hike in the recent cost raises concerns about long-term affordability for its members.  “With our customers’ best interests at heart, we engaged The Nairobi Hospital in open and constructive discussions, aiming to agree on a more sustainable, volume-based model that would safeguard both quality and affordability,” the statement read in part.

“Despite a sincere effort from both parties, we were unable to reach mutually acceptable terms. As a result, AAR Insurance member access to The Nairobi Hospital will be temporarily suspended effective Monday, 11 August 2025.”

CIC Group, on the other hand, wrote to its staff members saying it will suspend the services from Tuesday, August 12.

On July 30, 2025, the leadership of the hospital raised prices on critical diagnostic services such as CT scans, MRIs, ultrasounds, and daily inpatient charges by as much as 61.3 per cent.

This move was attributed to increased operational costs, including the rising price of pharmaceuticals and medical supplies.

The price increases included the cost of a Pap smear and HPV test fees rising by Sh5,000, bringing the total to Sh16,500.

Fees for an abdominal CT scan have risen to Sh30,000, while the cost of a heart MRI has surged to Sh45,000.

In critical care, the daily charges for the Intensive Care Unit (ICU) have increased to Sh42,250, marking a steep rise that has raised concerns among patients and healthcare advocates.  

Hospital chief executive Felix Osano defended the price increases.

“We recognise the concerns raised by our insurance partners, but reiterate that the tariff adjustments are necessary to maintain the high standards of healthcare our patients deserve. Independent comparisons indicate that our revised rates remain competitive and fair when measured against peer institutions offering equivalent levels of care and expertise,”Osano stated 

On August 9, 2025, the hospital CEO confirmed that consultative meetings are underway with medical insurance providers to resolve ongoing disputes related to the hospital’s recent tariff adjustment

All affected insurers have been invited to a formal forum today to craft “a mutually agreeable solution that safeguards patient care and sustains access to quality medical services.”

Debt, lawsuits, boardroom wars, and explosive claims of financial mismanagement have left the hospital on financial life support.

The leadership crisis deepened over the weekend after the current Chairman of the Board of Management, Herman Manyora, accused Osano and Company Secretary Gilbert Nyamweya of gross insubordination, reckless decision-making, and undermining Board authority.

In an internal letter dated Saturday, August 9, 2025, Manyora painted a grim picture of internal dysfunction and managerial breakdown, placing direct blame on the CEO and Company Secretary for recent events that have thrown hospital operations into crisis. 

He singled out the recent price hikes, saying it has dire consequences for the hospital’s accessibility and reputation. “This reckless move has triggered the suspension of services by more than eight major insurers, severely restricting patient access and damaging the hospital’s reputation,” Manyora stated.

He further accuses Osano and other executives of planning and undertaking an unauthorised trip to China, allegedly for equipment purchases that the hospital cannot afford, and which the Board did not approve.

The Board resolved to take disciplinary action against the CEO and Company Secretary, citing a resolution passed by the Board and court orders issued on July 3, 2025.

At the same time, the Board revealed it has already begun informal talks with several insurers to explore interim arrangements that could help restore patient access.

Nairobi Hospital has also found itself being dragged into court over mounting debts and internal power struggles.

In documents filed in earlier suits, KHA has accumulated debts exceeding Sh3 billion, including unpaid bills to suppliers and service providers like Opticom K. Limited, which finally decided to take legal action to have the hospital placed under liquidation to recover what it claims it’s owed.

In February 2025, the High Court temporarily froze the hospital’s board operations, including borrowing powers and access to fixed deposits, citing irregularities in how board elections  were conducted and questioning a Sh4.2 billion loan facility allegedly planned without due process.

Dr. Samuel Mithamo Muchiri, a medical doctor and a senior KHA member, filed the lawsuit accusing the board of squandering hospital funds and pushing the institution toward insolvency.

“We are looking at over Sh1.5 billion in unexplained losses, mounting legal bills exceeding Sh200 million, and chaotic governance that has reduced the hospital to a legal battlefield,” Mithamo, through his lawyer, stated.

- Additional reporting by Jacinta Mutura