Troubling Trajectory of Medical Care & Medical Aid Costs
In South Africa, a troubling paradox persists: the private health sector is spending more while delivering less. The problem stems from how resources are distributed. Hospital-based care absorbs the bulk of funding, while limited benefits mean that primary care remains chronically under-resourced. As a result, patients often bypass community-based services and end up in high-cost facilities for conditions that could have been managed earlier.
At a round-table discussion Tuesday 14 October, the bare bones of a healthcare system that basically does not care for the public that funds it was exposed. In essence the healthcare system in South Africa is inefficient, financially unsustainable, and increasingly out of reach for those who need healthcare most.
Medical Aid Profit Issue
This in comparison to the major players in the healthcare industry who seem to be a means to print profits for shareholders. Medical schemes in South Africa, as per the Medical Schemes Act of 1998, are explicitly structured as not-for-profit entities. This stipulates that contributions from members are to be pooled solely to cover healthcare claims and benefits, with any surpluses reinvested for members’ benefit. This regulatory framework has however failed dismally, with large medical aid schemes in South Africa outsourcing the administration to seperate financial administrator entities that make massive profits, essentially robbing members of more value.
Take Discovery Health (Pty) Ltd, as an example. This is the administration arm of Discovery Limited, and primarily handles the administration and managed care for the Discovery Health Medical Scheme (DHMS) and other medical schemes in South Africa. It earns revenue through administration fees and managed healthcare fees, which are approved annually by the scheme’s trustees. Discovery Health (Pty) Ltd, made the discovery group a cool 4,25 billion profit (up7% from 2024) for its full financial year ending in June 2025 as per the groups latest financial statement.
Healthcare System Currently Broken
The Healthcare system as it stands in the country is broken. Dr Brian Ruff, founder of PPO Serve, a medical data and medical optimisation company, contends that there is a massive imbalance that is created by a large demand driven health market against a small supply side, creating a market imbalance.
The conundrum is that for the majority of patients, when seeing a medical professional, they are not focussed on the payment – this is to a large extent funded by medical aid so there is little awareness or concern from either the medical professional nor the patient regarding costs. This creates a supply induced demand that often results in inflated costs for the service.
The other big issue is an ethical one, where many doctors are offered incentives to prescribe certain drugs or to promote certain procedures, becoming essentially a patient distribution channel for specialists. Many large medical groups also set targets for the number of patients a doctor must see in a day alongside other targets that provide better pay or incentives for the doctor. so with a five minute consultation with a doctor, and a lack of meaningful medical data for the patient, how useful is their diagnosis and what does it really contribute towards ensuring better ongoing health for patients?
In this system of healthcare, Doctors are currently getting paid for doing stuff and not for keeping people healthy. A completely inefficient and imbalanced approach that is likely to see levels of health drop while costs continue to escalate.
The nett result of this entire broken medical health care system is that scheme contributions go up every year with above inflation increases while the benefits are whittled away, leaving the people in society worse off financially and health wise.
The Solution For Better HealthCare
For Dr Brian Ruff, this dysfunction became impossible to ignore; “After three decades working across both public and private healthcare, I knew that it wasn’t just the public system in crisis – the private sector was too,” says Ruff. “I wanted to be part of the solution, so in 2015 we started PPO Serve to build a model where healthcare providers collaborate and patients receive quality, affordable care.”
What began as a two-person mission, with co-founder Riedwaan Jabaar, has grown into a team of nearly 50 Care Coordinators and 110 employees, all dedicated to transforming how private healthcare is funded and delivered. At the heart of PPO Serve’s approach is a complete overhaul of the traditional fee-for-service model. Rather than rewarding volume, value-based care puts patients first, focuses on prevention and teamwork, and links payment to measurable patient outcomes.
The Value Care Team – a GP-led, multidisciplinary programme operationally supported by PPO Serve – puts this model into practice. Healthcare teams collaborate under monthly risk-adjusted global fees, with substantial incentives tied to improved outcomes. Each patient of the participating GP practices is supported by a dedicated Care Coordinator, who guides them through decisions made by their medical team and other allied health professionals. Without scheme benefit limits to navigate, the focus shifts to accessing the right care rather than managing bureaucracy.
Tangible Data Driven Results
The impact on the ground is tangible. Dr Selvakumaran Shunmugam from Chatsworth, KwaZulu-Natal, sees it every day; “Patients can visit their GP and get specialist referrals without worrying about costs. No cash, no co-payments – just quality care that is accessible to everyone.”
In Richards Bay, value-based care has changed the way Dr Lungile Masuku approaches treatment. “A patient came in with oedema (swelling caused by excess fluid trapped in the body’s tissues), but was concerned about the cost of treatment. The patient was reassured and the tests revealed prostate cancer, as well as heart and kidney failure – conditions missed during a previous hospital stay. In the end, we were able to focus on thorough, investigative care and he was able to receive the life-saving treatment he needed.”
The System works on a regional hub basis with 15 Current regions that allows for regional health data collection and analysis as well as extensive individual health data that provides a clear picture of a patients health status and indications of potential future healthcare issues that can be pro-actively approached. This reinforces the role and effectiveness of the primary healthcare sector and in a three year trial, has shown to reduce hospitalisation rates for patients by a remarkable 29%.
Despite clear evidence of success, the private sector continues to prioritise profit over patients. A recent report by Open Secrets, Who Owns South Africa, underscores the scale of the problem, echoing what the Health Market Inquiry first found in 2019 – that large corporations and private equity firms continue to treat healthcare as a commodity. The research warns that private health services are increasingly profiting from a small group of powerful local and international financial actors who “see healthcare as little more than a collection of assets to trade.”
Healthcare Should Not Be a Commodity
This warning highlights exactly what PPO Serve has been working to counter for the past decade – and momentum is building. The Value Care Team is already proving the alternative works in practice, establishing a strong presence across Gauteng, KwaZulu-Natal, Free State and the Eastern Cape. PPO Serve leads South Africa in the growth and uptake of value-based care, with over 140 000 enrolled patients. Recognised by the World Health Organisation and the Board of Healthcare Funders as industry thought leaders, the programme has also been featured in international peer-reviewed research as a breakthrough case study for emerging markets.
But Ruff is clear that scaling this model will take more than isolated pockets of success; “System-wide change will only happen when funders embrace strategic purchasing that incentivises providers to adopt better ways of working. We’re doing our part to drive that change. There’s still much to learn and improve, but the next decade will show whether the healthcare system is serious about moving from talking about value-based care to putting it into practice.”
