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Background: How health facilities are financed affects their performance and health system goals. We examined how health facilities in the public sector are financed in Kenya, within the context of a devolved health system. Methods: : We carried out a cross-sectional study in five purposely selected counties in Kenya, using a mixed methods approach. We collected data using document reviews and in-depth interviews (no=20). In each county, we interviewed county department of health managers and health facility managers from two and one purposely selected public hospitals and health center respectively. We analyzed qualitive data using thematic analysis and conducted descriptive analysis of quantitative data. Results: Planning and budgeting : Planning and budgeting processes by hospitals and health centers were not standardized across counties. Budgets were not transparent and credible, but rather were regarded as “wish lists” since they did not translate to actual resources. Sources of funds : Public hospitals relied on user fees, while health centers relied on donor funds as their main sources of funding. Funding flows : Hospitals in four of the five study counties had no financial autonomy. Health centers in all study counties had financial autonomy. Flow of funds to hospitals and health centers in all study counties was characterized by unpredictability of amounts and timing. Health facility expenditure: Staff salaries accounted for over 80% of health facility expenditure. This crowded out other expenditure and led to frequent stock outs of essential health commodities. Conclusion: The national and county government should consider improving health facility financing in Kenya by 1) standardizing budgeting and planning processes, 2) transitioning public facility financing away from a reliance on user fees and donor funding 3) reforming public finance management laws and carry out political engagement to facilitate direct facility financing and financial autonomy of public hospitals, and 4) assess health facility resource needs to guide appropriate levels resource allocation.

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