As of this month, South African medical aid scheme contributions have increased by between 6–9% – nearly triple the Council for Medical Schemes’ recommended 3.3% guideline. While lower than last year’s double-digit surge, the underlying problem remains: premiums keep climbing while benefit coverage keeps shrinking, exposing cracks in private healthcare that are becoming impossible to ignore.
“We’re watching private healthcare price ordinary South Africans out of the market, one annual increase at a time,” says Lungile Kasapato, CEO of PPO Serve, a healthcare management company that has been implementing value-based care in South Africa for more than a decade. “Medical schemes are caught in an impossible position – unable to control what providers charge, they’re left managing what they cover. The result is diminishing benefits, rising co-payments, and mounting out-of-pocket costs for members.”
The root of the problem lies in how healthcare is paid for. Fee-for-service, the dominant reimbursement model, rewards volume over outcomes. More tests, more procedures, more bed days – each generates revenue regardless of whether they actually improve patient health. This narrow focus fragments care and drives costs up while keeping value low.
“No amount of funding can fix a payment model that drives the wrong incentives,” Kasapato explains. “Real change requires rethinking not just what we pay for, but how we pay for it.”
Value-based care offers a fundamentally different approach: putting patients at the centre, rewarding proactive care, and linking payment directly to health outcomes. PPO Serve’s The Value Care Team demonstrates what this looks like in practice. GP-led multidisciplinary teams receive monthly, risk-adjusted payments based on patient complexity, supporting holistic care and linking meaningful incentives to measurable results. Rather than maximising billable services, providers focus on optimising patients’ overall health.
For members, this means care is no longer limited by rigid benefit caps or pre-authorisation hurdles, but structured around what genuinely enhances the efficient delivery of their care. A dedicated care coordinator guides patients through decisions made collaboratively by their GP and allied health professionals, with each team member sharing accountability for better outcomes.
But scaling models like this requires medical schemes and public funders to step up. “The challenge isn’t proving value-based care works – it’s embedding it in an infrastructure built for an entirely different system,” says Kasapato. “Claims processing, scheme administration, provider networks – every layer of private healthcare is designed with fee-for-service in mind. Transitioning to outcome-based payment means rebuilding that system and accepting the upfront investment and friction that comes with structural change. The alternative is stark: a private healthcare market that collapses under its own cost pressures, pricing out members faster than schemes can adjust. South Africa is already on that trajectory.”
“If we’re serious about universal health coverage and the long-term sustainability of the private sector, we can’t keep treating symptoms while ignoring causes,” says Kasapato. “Value-based care models are already demonstrating what’s possible. The question isn’t whether transformation is worth the investment – it’s whether we can afford to delay it any longer. The more organisations that embrace a strategic purchasing role, the greater the potential for meaningful change, not just for medical schemes but for South Africa’s healthcare system and the millions who rely on it.”
