The Facilities Improvement Financing Act, no. 14 of 2023

1. Thi s Act may be cited as the Facili ties Sho rt T i t le . Improvement Financing A ct , 2023.

2 . I n thi s A ct , — Interpretation. “ chief officer” means the chief officer responsible f o r health in a respective county; “ county executi ve committee member” means the member of the,county executive committee responsible f o r health matters in a respective county; ‘.‘county health facility” includes county and sub county hospi tals, health centers, dispensaries and any other health entity registered to provide health services; ‘.‘d i recto r of m ed i c al ser v i ces' means the county director of medical services appointed by the respective county public service board; “ dispensary” means a health facility at level 2; “ entity” means a county health facility declared to b e a No. i s of 20 12. county government entity under section 5( 1) of the P u b l i c :Finance M anagement A ct; “ exemptions” means exemptions as defined in national policies; “ expenditure commi ttee” means a commi ttee constituted by the chief officer for health for the p u r p o se s of receiving, interrogating and approving the plans a n d budgets .from county and sub-county hospitals, health centers and di spensaries; “ facilities i improvement financing” means revenue . collected, retai ned, planned;f or .and used by; public h e a l t h , f aci li ties and uni ts; 402 N o . 14 Facilities I mprovement Financing 2023 “ health center” means a health facility at level 3; N o . 18 o f 20 12 . “ health facility committee” means the existing and currently constituted administrative arm that manages heal th f aci l ities; “ hospital” includes sub-county and county health facilities at levels 4 and 5 respectively; hospital management board” means the administrative arm that manages hospitals and includes t h e appointed and gazetted Boards as currently constituted; “ Hospital M anagement Team” means the executive management team of the hospitals as currently constituted; operational and management costs” includes planned and budgeted activities by county health f acilities; “public health facilities” means the whole or part o f a public institution, building or place, whether for profit or not, that is operated or designed to provide in-patient o r out-patient treatment, diagnostic or therapeutic interventions, nursing, rehabilitative, palliative, convalescent , preventati ve or other health service; receivables” means monies raised by a county health facility, monies appropriated by a county government, conditional grants, donations and gifts; and “ so u r ce o f f u nd s” m ean s al l so u rces o f m o n i es an d receivables collected for public health facilities' improvement financing.

3. The obj ect and purpose of this Act is to— Obj ects and purposes of this A ct. (a) provide for an effi cient , secure and accountable mechani sm for the collection, retention and management of revenue derived from health services rendered at public health facilities in K enya; (b) establish a governance framework that will facilitate effective planning, coordination, mobilization and access of public health facilities' improvement if nancing in Kenya; (c) provide for the appropriation, management and use of budgeted health services revenue to supplement 403 2023 Facil ities Improvement F inancing N o . 14 operations and facilitate quality service delivery i n public health facilities; (d) promote equitable health facilities improvement financing including benef it shari ng in accordance with the relevant laws of Kenya; and (e) provide for a unified system to guide financial management in public health facilities, improving efi ciency and ef fectiveness and ultimately quality health service delivery.

4. This Act shall apply from level 1 to level 5 public Application of this A ct . h eal th f ac i l i ti es. PA R T I I - PU B L I C H E A L T H F A C I L I T I E S I M PR O V E M E N T F I N A N C I N G

5. ( 1) There shall be retention of all monies rai sed o r R etent io n o f public health received by or on behalf of all publ ic health facilities. f ac il i t ies impro vement (2) There shall be opened a f acility improvement f inancing. if nancing account for each public health facility into w h i ch shall be paid all monies received by or on behalf of th e respective public health facility . (3) Non-fi nancial receivables and donations may be retai ned in whole or be re-donated to another public facility upon full disclosure as provided for in the relevant l aw s. (4) The income and other receivables retained by the public health facilities shall be considered as a supplement to the budgets and resources appropri ated to the public health facilities by the respective county government a n d n o t a su b sti tu te . So u r ces o f the

6 . T he so u r ces of rev enu e an d o th er r ecei v ab l es f o r publ ic health public health facilities improvement if nancing shall f ac i l i ties i nc l u de — impro vement financing (a) own source revenues that include monies received as user fees, charges and monies paid as r ei m b u r sem en t f or ser v i ces r ecei v ed f ro m insurance if rm s or other relevant entities; (b) money appropriated by the County Government to the health facilities from the equitable share; (c) conditional grants; and (d) donations and gifts. 404 N o . 14 Facilities I mprovement Financing 2023

7. The finances retained by Public Health Faci lities U ses o f t he f i nanc es retai ned sh al l b e u sed t o — by public health f ac i l it ies . (a) support the respective public health f acil ities’ optimal operations for effective service delivery throughout the financial year ; (b) subj ect to applicable f inanci al laws and regul ations, ensure readily available fi nancial resources for purchase and acquisition of urgent goods and services at the respective health f aci lity; (c) enhance, where applicable, the accessibility and predictability of finances for procurement of essential products, commodities and technologies; (d) ensure that health services are avai l abl e, accessible, acceptable, affordable and of good quality and standard; (e) guarantee that health f acilities are optimal ly resourced to offer quality care to all patients; (f ) facilitate primary health care and preventive services at the community level ; (g) sustain daily operations and promote improved ac c e s s t o h eal th se r v i c e s t o a l l r e si d e n t s i n t h e Republic of K enya; and (h) fund ambulance services for the transfer of patients from one health facility to another . PA RT I I I - POL I CY FORM UL A T I ON , RESEA RCH A ND D E V E L O PM E N T T O I M PR O V E M E N T F I N A N C I N G

8. The Cabinet Secretary responsible for matters R o le o f t he N at io nal relating to health shall provide a policy framework f o r t h e G o v er n m ent . admini stration of facility improvement f inancing by — (a) developing policy guidelines, i ncluding on revenue management and governance to promote transparency and prudent use; (b) collecting, receiving, collating and analyzing d a t a for facility improvement financing policy formulation and support; (c) establi shing a repository for financial information systems facility improvement financing linking county level plans to national level health policy i nterventions; 40 5 20 23 Facilities I mp rovement Financing N o . 14 (d) providing feedback based on data received to assist the national and county government performance monitoring of the facility improvement financing to ensure effective implementation; and (e) prescribing and assisting in the setting up of a standardized facility improvement financing health data systems. PA R T I V - M A N A G E M E N T A N D A D M I N I ST R A T I O N O F T H E I M PR O V E M E N T FI NA N CI NG

9. The county executive committee member shall R o le of t he County support the implementation of the facility improvement G o ver n m en ts . financing by — (a) facilitating effecti ve collection and retention o f facility improvement financing revenue by the public health facility in accordance with thi s A ct; (b) collating and reporting on all facility improvement financing revenue collected by public health facilities and ensuring their reflection in the County Budget Implementation Review Report as A ppropriation in A id; (c) implementing policies that will ensure direct complementary funding for all public health f acil i ties; (d) establi shing a repository for f inancial information systems facility improvement within the respective co u n ty ; (e) reviewing and approving expenditure plans and issuance of timely authority to incur expenditure to heal th f aci l ities; (f) subj ect to the relevant financial laws, overseeing health facilities to ensure optimal management of rev en ues; (g) planning and budgeting support to health facilities to ensure integration into the county planning and budgeting process on facility improvement f inancing; 4Ub N o . 14 Facilities I mprovement Financing 2023 (h) evaluating the quality of health services and its linkage to health resource allocation deci sions on facility improvement financing; (i) ensuring that community members are represented in the facility improvement financing governance structures of public health facilities; (j) appointing health facility management committees, health management committees and Boards, where applicable, and publishing in the official Gazette; and (k) performing any other role that the county or national legislation may prescribe on facility improvement if nancing.

10. (1) There is established a County Health E stab l i sh m en t o f County Health Management Team in each county. M anagement T eam . (2) The county health management team shall be appointed by the county executive committee member f o r h eal th as f o l l o w s — (a) the county director of health, who shall be the chairperson; (b) the administrative of if cer of the department, who shall be the secretary to the team; (c) all section or unit heads within the health department; and (d) the medical superintendents of the county hospitals.

11. The county health management team shall , in F unc t io n s o f the County Health relation to facility improvement if nancing, perform th e Management following functions— T eam . (a) co-ordinating and overseeing the interpretation an d implementation of county health laws and national health policies, including maintenance of standards on quality, performance, co-ordination and regulation, and control of all health and private sectors in their areas of j urisdiction; (b) reviewing, monitoring the implementation and advising the county department of health on appropriate measures to be adopted for ef fective 407 2023 Facilities Improvement Financing N o . 14 implementation of relevant national and county legislation and policies; (c) co-ordinating, supporting and supervising the planning, implementation, monitoring and evaluation of technical and managerial activities for health services in the county ; (d) ensuring that good governance and management standards are applied within f acilities and in the rel ations betw een f aci l i ties; (e) supporting sub-county health management teams and facility management teams in preparing annual and quarterly operational plans, including their respective budgets and procurement plans; (f) reviewing and approving the consolidated facility plans submitted by sub-county hospitals; (g) providing support and supervision to the management of county health facilities; (h) developing supplementary sources of income for the provision of services, in so far as these are compatible with the applicable law; (i) making due provision and developing criteria to compensate health care facilities for debts arising through failure to secure payment for bills or from non-payment of treatment of indigent users; (j) checking the accuracy and timeliness of all financial reports submitted by the sub-county health facility management team to facilitate prompt approval of spending by facilities; (k) ensuring that available qualified human resources are equitably deployed, capacity building needs assessed and any identified gaps ef fectively addressed ; (1) ensuring an efficient and ef ective vertical and hori zontal f l ow of i nf orm ation; (m) reviewing and approving annual financial statements and reports before submission to the chief of f i cer of health ; and (n) ensuring that health facilities are adequately resourced in terms of budgetary provisions, health 40 8 N o . 14 Facilities Improvement Financing 2023 products and technologies, equipment and human r e so u r c e .

12. (1) There is established a Sub-County Health E st ab l i sh m e nt o f the Sub-County Management Team for each sub-county in a county. H ealt h (2) The Sub-County Health Management Team shall M anagement T eam . be appointed by the county executive committee member a s f ol lo w s— (a) the health officer in charge of the sub-county; (b) the sub-county administrative officer; (c) all Unit heads within the sub-county department; (d) the medical superintendent of the sub-county hospitals; and (e) any other officer as the county executive committee member may, in consultation with the County Health Management Team, designate.

13. The Sub-County Health Management Team shall, F u nc t io ns o f the in relation to facility improvement financing— Sub County H eal th M anagement (a) support health facility management teams in T eam . preparing annual and quarterly operational plans, including their respective budgets and procurement plans; (b) review and consolidate plans submitted by health facility management teams; (c) consolidate and send annual and quarterly facility budgets to the County Health Management Team for approval by the Department of Health; and (d) check the accuracy and timeliness of all financial reports submitted by the Hospital Management Team in order to facilitate prompt release of quarterly funds.

14. Every hospital in the county shall have a Hospital h ospital M anagement Team which shall consist of — (a) the medical superintendent; (b) the hospital administrator; (c) the hospital accountant; (d) the hospital procurement officer; and (e) all departmental heads. 409 2023 Facilities Imp rovement F inancing N o . 14 F u nc t io n s o f t he

15. A Hospital M anagement Team shall , in relation to H ospital f acility improvement fi nancing— M anagement T eam . (a) prepare and present the annual hospital work plan and budget; (b) prepare monthly, quarterly and annual financial report s; (c) monitor the performance target of the facility improvement f inancing and other sources of funds to the f acility; (d) undertake resource mobilization for the hospital ; (e) ensure internal audits are periodically undertaken to mitigate financial ri sks; (f) ensure external audits are undertaken on a timely basi s; (g) ensure efficient and effective utilization of resources paid into the facility improvement financing; and (h) receive reports and monitor collection, waivers, exemptions, expenditure and use of f unds. E st ab l ish m e nt o f

16. ( 1) There shall be established a Health Facility the Health Facility Management Team which shall comprise of the health M anagement f acility in-charge and all the section or unit heads. T eam . (2) The Health Facility M anagement Team shall oversee the overall management of the health facility w i t h coll aboration from the Health Faci lity M anagement C o m m i t tee . Composit ion of

17. ( 1) The Health Facility M anagement Committee the health f acil ity sh al l co n si st o f no t ' ';ss th an sev en and n o t m o re t h a n n i n e m anagem ent members appointed by the county executive committee c o m m i ttee . m em ber as f o l l o w s — (a) the in-charge of the health facility , who shall b e ex of f icio and the Secretary to the Committee; (b) the Sub-county Medical Officer of Health or their representative; (c) a village representative; (d) one person, who is a resident of the area, nominated by a j oint forum of women’s organizations in the area; 4 10 N o . 14 Facilities Improvement Financing 2023 (e) one person, who is a resident of the area, nonunated by a j oint forum of youth organizations in the area; (f) one person, who is a resident of the area, nominated by a j oint forum of faith-based organi zations; and (g) two people representing the interest of the vulnerable and marginalized communities, one of whom shall be a person with disability. (2) The Chairperson of the Committee shall be elected fr om amongst the members of the Committee. (3) In constituting the Committee, the county executive commi ttee member shall ensure that — (a) at least one third of the total membership of the Committee shall be from the opposite gender; (b) the membership includes persons f r o m marginalized communities; and (c) the interests of diverse groups in the catchment area are represented .

18. The Health Facility Management Committee shall, R o l e o f the H eal th in relation to the Improvement Financing— Facility Management (a) consider and submit for approval to the chief co m m i ttee . officer the annual facility work plan and budget; (b) consider and submit for approval to the chief officer the facility quarterly budgets; (c) ensure the quarterly implementation plans and budgets are based on available resources; (d) monitor the utilization of facility improvement if nancing and take corrective action in relation to implementation challenges identifi ed that hinder effi cient absorption of funds; (e) ensure all if nancial procedures and reporting requirements are met by the facility in-charges and conform to the Public Finance Management Regulations; (f) ensure strict adherence to procurement rules as prescribed in the Public Procurement and Asset Disposal A ct; 4 11 20 23 Facilities I mp rovement F inancing N o . 14 (g) ensure public awareness on administration of the facility improvement financing through public participation during annual planning and budgeting; N o . 33 o f 20 15 . (h) receive the audit report and initiate response t o management queries; (i) implement the recommendations of the A uditor- General made pursuant to section 31(3) (a) of the Publ ic A udit A ct ; (j) implement the recommendations of the Senate and the respective county assembly on the ,relevant report of the Auditor-General; (k) implement the relevant recommendations of the Controller of Budget on the facility ; and N o .34 o f 20 15 . (1) act as li aison between the health center or dispensary and the community to strengthen delivery of quality health services.

19. (1) The appointments of the members to the Board T er m s and co nd it io ns o f an d C o m m i ttee i n th i s Part sh al l b e i n su ch a m an ner t h a t appointment . the respective expiry of their terms shall fall at d i f f eren t d ates . (2) The members referred to in subsection ( 1) shall b e appointed for a term of three years and shall be eligible f o r reappointment for one further term of three years. PA R T V - F I N A N C I A L P R O V I SI O N S B ank acc o unt f o r

20. ( 1) There shall be opened and operated a bank the Facility account for every entity into which all monies received by Impro vement and on behalf of the entities for the faci lity improvement Financing. fi nancing shall be paid into. (2) With respect to a hospital , the mandatory signatories to the bank accounts shall be the medical superintendent and the hospital administrator. (3) With respect to a health center and dispensary, t h e mandatory signatory to the bank account shall be the facility in-Charge and sub-county accountant . A uthority to I ncur

21. ( 1) The chief off icer shall be the accounting Expenditure. o f f i cer . N o . 14 Facilities Improvement Financing 2023 (2) The hospital medical superintendent and facility in-charge shall receive authority to incur expenditure f r o m th e ch i ef o f f i cer .

22. (1) Upon issuance of authority to incur Expenditure of the facility expenditure to the medical superintendent or facility i n improvement charge, the user department shall raise vouchers for f inancing. payment for services or procurement of commodities. (2) The vouchers shall be verified by the respective hospital accountant, or the accountant responsible f o r th e health center, whichever is applicable. (3) The vouchers shall be presented to the County Department for Health Accountant for confirmation that t h e items requested are in the vote book and f hereafter approved . (4) The voucher shall revert to the medical superintendent or facility in charge for initiation o f p ay m en t . (5) An integrated financial management system shall be used as the primary accounting platform for the county en ti ti es. (6) All county entities shall not expend any finances without express authority to incur expenditures. (7) The chief officer for the county treasury in consultation with the chief officer may appoint accountants for health centers and dispensaries for purposes of p r o p e r financial accounting and record keeping. (8) The expenditure incurred by the health facilities shall be on the basis of , and limited to, the available finances in the respective bank accounts and the authority to incur expenditure. (9) Health facilities shall be expected to file returns and financial accounts in the format prescribed by county legislation for the preceding quarter to the chief o f f i c e r before a new authority to incur expenditure is issued.

23. Within three months after the end of each financial Annual reporting. year, the accounting officer for a county health facility sh a l l - (a) submit the facility’s financial statements to the N o . 34 o f 20 15 . Auditor-General in accordance with the Public A udi t A ct ; and 20 23 Facilities Improvement F inancing N o . 14 (b) submit a copy of the facil ity ’s financial statements to the Controller of Budget and the Commi ssion o n R e v en u e A l l o c at i o n .

24. T he facility improvement f inancing shall be A ud it . subj ected to audits in accordance w ith the Publ ic A udit A c t . N o . 34 o f 20 15 . O v er d r af t and

25. ( 1) The accounting officer shall ensure that the continuity . facility improvement financing accbunts are not overdrawn. (2) The f acility improvement financing shall not lapse with the turn of a new financial y ear , but any residue o f finances shall be captured in the following financial y e a r budget nnd annual plans and rolled over . W inding up of 26). In circumstances when a health f acility i s closed I mprovement and the improvement financing i s to be wound up, the Financing. balances shall be swept to the County Revenue Fund a n d a certif i(cate sent to the accounting,officer for the department o f h e ail t h . FART VI - MISCELLA^k oUSPROVISIONS T r ansi t io nal

27. A ll members of the cur rent Hospital M anagement Board or Committees and Healilh Facility Committeessh a l l prov isions. continue to operate as per exi sting regulations up to th e expiry of their respective terms. Pen al t ies .

28. The penalties stipulated in the Public Finance N o . 12 of 20 12 . M anagement A ct and the Public: Procurement and A sset N o . 33 of 20 15 . Di sposal A ct and other wri tten l aw s on mi suse, mi sappropriation and other dievi ati ons shall apply .

29. A county govern ment mai/ enact legislation to give County legislation. further effect to the provisions of fJi i s Act in the respective co u n ty .