Globally, effective PFM is widely recognized as a cornerstone of efficient and equitable health systems [1]. Public Financial Management (PFM) encompasses the rules, institutions, and processes that govern the collection, allocation, use, and accountability of public resources, typically structured around the budget cycle, which includes formulation, execution, and evaluation [2,3,4]. According to the World Health Organization (WHO), PFM influences health system performance through three primary channels: the level and allocation of public funds, the efficiency of spending, and the flexibility of fund use [5]. Inadequate resource allocation, misalignment between budgets and policy priorities, and rigid budget structures often result in inefficiencies and service delivery gaps [6]. In response, the Global Action Plan Sustainable Financing Accelerator has called for targeted PFM reforms in the health sector, with a particular emphasis on policy-based and program-based budgeting [7].
Across sub-Saharan Africa, countries have adopted decentralization as a governance reform aimed at improving service delivery, accountability, and responsiveness. However, the implementation of PFM reforms has been uneven [8]. While high-income countries have institutionalized program-based budgeting to enhance flexibility and resource alignment, many low- and middle-income countries (LMICs) in Africa remain in transition. Only 18% of the 41 African countries have adopted program-based budgeting, and just a few, including Kenya, Burkina Faso, Gabon, Mauritius, and South Africa, have institutionalized these reforms [9]. Persistent challenges include underspending, weak prioritization, and inequitable resource allocation, particularly the overemphasis on secondary and tertiary care at the expense of primary healthcare [2]. Moreover, decentralization has often introduced fragmentation in budgeting processes, with limited coordination between central and subnational governments [10, 11].
Kenya is a lower-middle-income country located in East Africa, with a population of approximately 47.6 million, as reported in the 2019 Population and Housing Census [12]. The country is administratively divided into 47 counties, which vary significantly in population size. The most populous counties include Nairobi, Kiambu, Nakuru, Kakamega, and Bungoma [12]. Following the promulgation of the 2010 Constitution, Kenya undertook a major governance reform in 2013, transitioning from a centralized to a devolved system of government. This reform introduced a two-tier structure comprising a national government and 47 county governments, each with distinct but interdependent mandates [13]. The Fourth Schedule of the Constitution outlines the functions of each level of government, with counties assuming responsibility for key service delivery sectors, including health [14]. The principle of “consultation and cooperation” governs the relationship between the two levels of government.
The rationale for devolution included improving equity, enhancing accountability, and aligning services with local needs [10]. However, the transition has been marked by coordination challenges between national and county governments, particularly in aligning health financing mechanisms with decentralized governance structures [11, 15, 16]. Counties receive funding through national block grants and locally generated revenue, but disparities in local revenue capacity have led to variations in health sector funding across counties [17]. In the health sector, this has involved transferring decision-making authority over resource allocation and service delivery to county governments. Governance structures such as Facility Management Committees (FMCs) and District/Hospital Management Boards (D/HMBs)—comprising elected community representatives and appointed officials—were established to provide oversight and community participation in health planning and budgeting [18]. The institutional framework of county governments includes two arms: (i) the County Executive, led by an elected Governor and Deputy Governor, responsible for implementing devolved functions; and (ii) the County Assembly (CA), composed of elected Members of the County Assembly (MCAs) representing electoral wards, along with nominated members representing special interest groups such as women, youth, and persons with disabilities. The allocation of nominated seats is proportional to party representation within the CA [13].
Kenya’s healthcare system is organized in a hierarchical structure comprising six levels of care. It begins at the community level (Level 1), where community health workers provide basic services such as health education and disease prevention. Levels 2 and 3 include dispensaries, private clinics, and health centers that offer outpatient care, maternal health services, and minor surgeries. Secondary care is provided at Level 4 through sub-county hospitals, while Level 5 county referral hospitals offer specialized and advanced medical services. The highest level, Level 6, comprises national referral hospitals that provide highly specialized care and are managed by the national government [19]. Before devolution, community and subnational stakeholders had limited involvement in health sector planning and budgeting, often resulting in a disconnect between local needs and centrally determined priorities [20]. While devolution has theoretically addressed these top-down planning limitations, empirical studies have identified persistent challenges at the county level, including limited technical capacity for planning and budgeting, politicization of health sector priorities, and weak coordination mechanisms [21,22,23].
Kenya, like many countries, has adopted UHC as a national policy priority, aligned with Sustainable Development Goal 3.8 [24]. Kenya has implemented a series of health sector reforms aimed at achieving Universal Health Coverage (UHC), a key component of Sustainable Development Goal 3.8 [25, 26]. In 2017, the government committed to achieving Universal Health Coverage (UHC) by 2022 as part of the President’s Big Four Agenda [27], which prioritized expanding access to essential health services and reducing out-of-pocket expenditures. Despite notable progress, the country continues to face significant challenges, including constrained fiscal space, a high disease burden, and widespread poverty, which limit access to healthcare for low-income households [28].
Kenya’s UHC strategy is anchored on three pillars: (a) publicly financed primary healthcare services, including preventive, promotive, outpatient, and basic diagnostic services; (b) a Social Health Insurance Fund (SHIF) administered by the National Health Insurance Fund (NHIF); and (c) a national fund for chronic and catastrophic illnesses, covering conditions such as cancer, diabetes, stroke, and pandemics [29]. This fund is financed through a combination of government allocations and insurance levies [10]. As part of the Big Four Agenda [30, 31],. The government launched a UHC pilot program in December 2018 to assess the feasibility of eliminating user fees in public health facilities. Four counties were selected based on specific health indicators: Machakos (high incidence of injuries), Nyeri (prevalence of non-communicable diseases), Isiolo (nomadic population dynamics), and Kisumu (high burden of infectious diseases such as HIV/AIDS and tuberculosis) [32].
The pilot program was funded by the national government, which required county governments to eliminate user fees at level 4 and 5 health facilities. In exchange, the national government committed to reimbursing counties for the resulting loss in revenue [33]. The distribution of funds was structured as follows: 72% was allocated to the provision of basic and specialized healthcare services, 15% to health systems strengthening, 12% to community health services, and 1% to public health initiatives [34]. Within the allocation for basic and specialized care, 70% was directed to the Kenya Medical Supplies Authority (KEMSA) for the procurement of essential medical equipment, pharmaceuticals, and related supplies. The remaining 30% supported operational costs and maintenance of level 4 and 5 health facilities [35]. A significant portion of the health systems strengthening budget was utilized to hire healthcare personnel on a contractual basis. Community health service funds were primarily used for training and equipping community health volunteers. Meanwhile, the allocation for public health services was channeled to county health management teams to support quality assurance, data collection, and disease surveillance activities.
The pilot aimed to deliver a defined package of health services at no cost to patients, with the government assuming full financial responsibility for these services. The pilot concluded in 2019, generating critical lessons to inform the national scale-up of UHC across all 47 counties. The articulation between decentralization and health financing policy at the county level is crucial to achieving UHC [36]. The 2019 UHC pilot program presented both opportunities and challenges in aligning PFM processes with health financing objectives. Although the national government led the pilot, it was operationalized through existing county-level PFM systems. Previous studies have examined broader PFM issues in Kenya’s health sector [15, 34, 37], but there is a gap remaining in understanding further the specific PFM experiences during the UHC pilot, especially about the diverse contexts in the four counties. This study, therefore, aimed to examine the PFM experiences encountered during the implementation of the UHC pilot program in four counties in Kenya. Specifically, the study aimed to (a) explore the role of county-level PFM systems in the planning, allocation, and utilization of UHC pilot funds and (b) identify key PFM-related constraints and enablers that will affect the implementation and sustainability of countrywide UHC programs in the future.
link