Many private health providers declined to participate in the National Health Insurance Fund scheme because the money it offered was inadequate.
The providers said they felt the Sh2,850 that was being allocated per member per year was too little.
Dr Peter Omboga, secretary general of the Association of Kenya Private Hospitals, told MPs on Wednesday that the offer was not workable and taking it would mean rationing services to maximize on profits, which would defeat the purpose of the scheme.
A demand of Sh6,000- Sh9,000 per person per year was the deal breaker, he said.
Dr Omboga said some of their members eventually came down to Sh4,000- Sh4,500 which they felt would allow them to just offer essential services without any profit.
He said at one point the association considered taking NHIF to court over its decision to work with Clinix Healthcare Ltd and Meridian Medical Group.
The two who scooped a big share of the funds provided for the scheme are not members of the association.
Meeting the parliamentary committee on Health, the association said apart from issues of capacity and presence around the country, they felt that some of the outlets of Clinix Healthcare and Meridian Medical Group did not go through the due process of accreditation as is the practice in the health sector.
He said the association thought of taking legal action against NHIF but pulled back to give the scheme a chance since it was an attempt to offer universal healthcare to Kenyans.
The providers met the parliamentary team to shed light on ongoing investigations into alleged irregularities in the NHIF outpatient scheme for public servants.
The committee had been informed that most private health facilities were unable to meet the requirements for inclusion in the new outpatient scheme.
“We were very supportive of the scheme, the problem we had was the manner in which it was being done,” said Dr Kanyenje Gakombe, the vice chairman of the association.
The officials told the committee that they made attempts to point out to the NHIF team their worries about the carrying capacity of the two health institutions given the high number of members they had been allocated.
Meanwhile, committee chairman Dr Robert Monda has issued a final order to the management of Clinix Healthcare Ltd to appear before it on Monday, failure to which the committee may invoke sections of the rules of Parliament to state action to be taken against the team.
The management team failed to turn up for a meeting that was scheduled on Tuesday morning, stating that they were not informed of the same. (READ: Two clinics received a third of health funds)