Rwanda: Why King Faisal Hospital Grapples With Rwf12 Billion Losses

16 September 2023

King Faisal Hospital is grappling with reversing a negative liquidity situation as it seeks to address a more than Rwf12 billion loss accumulated over time, it has emerged.

Hospital officials told the Parliament's Public Accounts Committee (PAC) on September 14 that measures to that end include increasing medical tariffs to match the current rise in product prices.

It was during PAC hearings that the hospital management team was providing explanations for issues identified by the Auditor General in his report for the financial year ended June 30, 2022.

According to the report, until the audit period, King Faisal Hospital was a 'loss-making company.'

The audit noted that the hospital's net loss position deteriorated from more than Rwf726 million at the end of 2020 to Rwf1.5 billion as of December 31, 2021, meaning that its loss more than doubled in one year. In the audit period, the hospital had accumulated losses amounting to Rwf12 billion.

MP Jean Damascène Murara wondered "why King Faisal as a hospital that is exemplary in Rwanda and the region," yet it is struggling with losses.

"We see Burundians, Ugandans and Congolese, and many Rwandans coming to get treatment there, and it is offering many solutions to people who used to seek treatment in India; why is King Faisal Hospital operating in endless losses? When will these losses end?" Murara wondered.

The director of finance at King Faisal Hospital, Jean de Dieu Barahira, said that: "Looking at the income statement, you realise that the loss of 2021 was Rwf1.5 billion, but in the first half of 2022, the loss was Rwf125 million which implies a major improvement."

He indicated that the aim is to continue cutting losses.

Factors for the losses

The Chief Finance Officer at King Faisal Hospital, Anita Rugeyo, said that though it is described as a private commercial enterprise, it is a hospital - with the core mandate to offer healthcare to save lives. She said there are, sometimes, cases of patients who fail to pay bills.

"When they fail to pay, that is also counted in King Faisal Hospital. These include many people who are members of CBHI - community-based health insurance scheme - who cannot afford their copayment," she said.

"There are also [some] foreigners who come to King Faisal Hospital for treatment but fail to pay medical bills," she added, elaborating on the factors that lead to losses.

Again, she indicated, there are cases where the hospital provides treatments to patients - as its primary responsibility is to treat people - but health insurance firms do not cover the health services in question as they are not agreed upon with the hospital.

MP Jeanne d'Arc Uwimanimpaye suggested that countries from which foreigners who are unable to cover the fees in question should support them to avoid a situation where the hospital would be burdened by non-payments.

Reviewing medical tariff

Another factor for the loss, which is being discussed by entities including the Ministry of Health and Ministry of Finance and Economic Planning, is the medical tariff that King Faisal Hospital uses currently, Rugeyo told MPs.

"Currently, we use the tariff of 2018. As you know, the prices of 2018 and the current ones are completely different. We did not increase prices yet patients who receive healthcare at King Faisal Hospital are provided with food and other necessities and they pay at the same rates as those of 2018, yet we purchase at prices of 2023," she said.

"We hope that once it is addressed, it will offer us a possibility to get rid of this loss," she observed.

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