A year after it began operations at its new ultra-modern complex along Kiambu Road, AAR Hospital announced plans to lay off its staff in a cost-cutting measure on Friday.
In a memo to staff dated October 10, 2022, AAR Hospital CEO Dr Ken Muma stated that the decision was reached based on the fact that the volume of work at the Sh2.5 billion,140-bed facility had failed to grow as initially projected.
Therefore, the company can no longer sustain its current workforce.
When it officially launched, many saw the high-end facility as a good business proposition, considering that Kiambu Road is viewed as the new frontier for the Nairobi middle class.
The catchment area was ripe with clientele, so, how did it all go wrong?
AAR Hospital was a sad case of a castle built on quicksand.
After years of running on a poor business model that led to a diminishing brand reputation, reality finally caught up with them.
Its connection to the tarnished AAR trademark (the hospital was often confused with AAR Insurance and AAR Health Care) and endless controversies surrounding the quality of its drugs as well as poor customer service badly affected the hospital’s image.
Despite a magnificent facility and heavy investment in media (adverts about the hospital were basically on replay mode on urban radio stations like Classic FM) the hospital was mostly empty.
The staff outnumbered patients, yet services remained slow.
Patients also lamented that most of the specialists were young and inexperienced.
A spot check on social media leads to a host of complaints towards the facility.
Every hospital requires a story that relates to the masses, a story that they appreciate and hold dear.
This is something that lacked at AAR Hospital.
There was nothing much beyond the fancy building.
The only time that the place saw a glimpse of traffic was during the height of the pandemic, when they raked in millions by extorting patients with exorbitant amounts for Covid-19 tests.
At the time, the hospital’s mysterious owners reportedly enjoyed a good relationship with top figures from retired President Uhuru Kenyatta’s regime, which saw civil servants drawn from various public entities specifically referred to the facility for tests.
AAR Hospital falls under AAR Healthcare, a subsidiary of AAR Group, which is discreetly controlled by Hospital Holdings Investment (HHI) – a private healthcare holding company that manages an integrated healthcare services business across the East African region.
Steve Okeyo is the Group Chief Executive Officer of HHI.
In 2011, the AAR Group’s shareholders resolved to separate the business into two distinct units, AAR Healthcare and AAR Insurance.
Charles Kariuki is Managing Director at AAR Healthcare Kenya Ltd.
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The insurance wing exited Tanzania in 2019, while the healthcare unit announced its exit last year.
AAR Healthcare also has operations in Uganda, where it launched in 1994 and Kigali, where it was unveiled in 2005.
It is the largest provider of outpatient healthcare services in the East Africa region, running a network of 19 medical centres in Kenya.
In 2020, a consortium led by the International Finance Corporation (IFC) acquired a 54.23 stake in healthcare holdings.
The consortium, which included Hospital Holding Limited, Sweden’s State-owned investment firm Swedfund and other private entities, paid over Sh1.5 billion in the acquisition.
