South Africans rightly expect access to the latest medicines, advanced technology and world-class healthcare. Every year brings new treatments that improve and extend lives. Robotic surgery, precision medicine, advanced cancer therapies and sophisticated diagnostic tools are transforming patient care.
The difficult question is not whether these innovations are valuable, but who ultimately pays for them.
Healthcare has never been more advanced, but it has also never been more expensive. Every new medicine, breakthrough treatment and additional healthcare benefit comes at a cost. There is no magic pot of money that funds medical innovation. Every rand spent on healthcare ultimately comes from medical scheme contributions, taxes or patients’ own pockets.
Medical schemes therefore face an increasingly difficult balancing act. They must provide members with access to high-quality healthcare while ensuring that cover remains financially sustainable. Achieving this balance requires careful purchasing decisions and funding mechanisms that maximise value for money rather than simply reducing costs.
The objective is not to purchase the cheapest healthcare. It is to achieve the best possible health outcomes for every rand contributed by members.
Prescribed Minimum Benefits
This challenge becomes particularly important when viewed against South Africa’s Prescribed Minimum Benefits (PMBs).
PMBs are a defined set of health services, including emergency care and treatment for serious medical conditions, that every medical scheme is legally required to cover in full, regardless of the benefit option a member has selected. This provides essential financial protection, ensuring that members can access life-saving care without facing catastrophic healthcare costs.
Meeting this obligation requires medical schemes to purchase healthcare as efficiently as possible without compromising quality or access. Unlike many countries, South Africa does not regulate the prices that most private healthcare providers may charge. Yet medical schemes remain legally obliged to fund PMBs in full. The ability to negotiate reimbursement rates is therefore one of the primary mechanisms that enables schemes to meet this obligation while keeping contributions sustainable.
Every health system, whether publicly or privately funded, must decide how to purchase healthcare within finite resources. Some negotiate medicine prices. Others negotiate hospital tariffs or provider contracts. South Africa’s medical schemes use provider networks as one of the principal mechanisms to purchase healthcare more efficiently and deliver better value for members. Without these purchasing mechanisms, healthcare costs inevitably rise.
One of the most important tools available to schemes is the Designated Service Provider (DSP) network.
Why provider networks matter
A Designated Service Provider is a hospital, doctor, pharmacy or other healthcare provider contracted by a medical scheme to deliver care at negotiated reimbursement rates.
These arrangements align the interests of members, healthcare providers and medical schemes by creating value for all three. Members benefit through lower contributions, lower out-of-pocket costs and protection from unexpected balance billing. Providers agree to negotiated reimbursement rates and benefit from network participation that delivers greater patient volumes, faster payment and lower administrative and bad debt costs.
Although provider networks improve affordability, they are about far more than price. Providers generally need to meet agreed quality and service standards before joining a network. Networks support coordinated care for conditions such as cancer, HIV and other chronic diseases, allowing schemes to promote evidence-based treatment, monitor quality and improve health outcomes.
Importantly, provider networks do not deny members access to essential healthcare. Existing legislation already protects members where a designated provider is not reasonably available, where treatment is an emergency or where care cannot reasonably be delayed. Provider networks therefore improve affordability without compromising access to essential care.
What the data shows
Contrary to some perceptions, almost every PMB claim is already paid in full.
Data from our member schemes in 2025 shows that approximately 97.7% of PMB claims are already paid without any co-payment, while co-payments account for just 2.3% of total PMB claim values.
The current framework is therefore already delivering the financial protection it was designed to provide and the value created by provider networks is substantial.
Members benefit from between R8.8 billion and R11.5 billion in annual savings because medical schemes negotiate lower reimbursement rates through provider networks. Those savings are ultimately reflected in lower contributions for members.
Without these savings, medical scheme contributions could increase by an additional 3% to 4% over and above normal annual increases.
Why this matters
The medical scheme population is predominantly made up of lower- and middle-income households. Around 83% of beneficiaries earn less than R40 000 a month, while almost half earn less than R16 000.
These are the members who rely most heavily on affordable, network-based benefit options. Those options remain sustainable because medical schemes can negotiate favourable reimbursement rates through strong provider networks. If these networks are weakened, it is households with the least room in their budgets that will feel the impact first through higher monthly contributions.
The principle worth protecting
Healthcare will continue to evolve. New treatments will emerge and expectations will continue to rise. The challenge is ensuring that these advances remain financially accessible.
Provider networks are one of the most effective mechanisms medical schemes have to purchase healthcare strategically, negotiate fair reimbursement rates and build coordinated systems of care that improve both quality and affordability.
Healthcare innovation is only meaningful if people can afford to benefit from it. Preserving strong provider networks is therefore not simply about protecting contractual arrangements between medical schemes and healthcare providers. It is about protecting affordable access to high-quality care for millions of South Africans.
Ultimately, the future of healthcare will depend not only on medical innovation, but on our ability to keep that innovation affordable.