Challenges of healthcare quality in Kenya’s tertiary hospitals: assessing the contribution and constraints of asset leasing financing mechanism

Kenya’s public tertiary healthcare is facing persistent quality of healthcare challenges characterized by acute shortage of healthcare workers, frequent industrial unrest, broken-down healthcare facilities, and erratic supply of essential commodities. To address these systemic challenges the government introduced the asset lease financing (ALF) mechanism aimed at strengthen tertiary hospitals through modern medical equipment and technologies. However, the effect of ALF on quality remains highly debated and controversial. This study examined the effect and constraints of ALF in improving quality of healthcare within Kenya’s tertiary hospitals. A convergent parallel mixed-methods design was employed with quantitative data collected from 145 hospital managers, staff and patients. Descriptive statistics were used to summarize participants characteristics and indicators of study variables. Ordinary least square regression was then used to estimate the effect of ALF on quality of tertiary healthcare, controlling for existing traditional funding. Complementary qualitative insights were gathered from 26 policymakers, hospital managers, and health financing experts through semi-structured interviews and analyzed using thematic analysis to identify patterns in strengths and constraints. Integration of findings happened through triangulation to enhance interpretation and understanding. Analysis showed that asset lease financing had a significant positive effect on quality of tertiary healthcare (β = 0.587, p < 0.01), explaining 26% of the variance. When traditional funding was controlled, ALF remained significant (β = 0.495, p < 0.01), with the model explaining 33% of the variance. Respondents attributed this to improved access to advanced diagnostic and therapeutic equipment, as well as expanded service capacity. However, descriptive summaries and qualitative perspectives revealed several constraints limiting ALF optimal effect in improving tertiary healthcare quality in Kenya. Stakeholders noted high recurrent costs, under-utilized assets, weak contract negotiation, and top-down procurement processes that limited hospital autonomy and contribution. Operational gaps, including inadequate training and delayed maintenance, further constrained ALF effect on quality. ALF has the potential to enhance quality of healthcare and technological capacity in Kenya’s tertiary hospitals, but its effects are contingent on robust governance, effective contract design, and alignment with institutional capacity which seem lacking in the Kenyan context. Without these safeguards, current leasing arrangements risk becoming fiscally unsustainable with little quality enhancement. Policymakers should strengthen transparency, decentralize decision-making, and incorporate performance-based provisions into leasing contracts to maximize ALF effect in enhancing quality of care.