The Competition Commission has recommended that the Competition Tribunal approve the proposed merger between Fedhealth and Medshield, two of South Africa’s leading open medical schemes.
The deal, if finalised, would reshape the healthcare funding landscape by creating a combined scheme with nearly 250 000 beneficiaries.
The transaction involves Fedhealth acquiring Medshield, consolidating both schemes’ operations into one entity.
Fedhealth currently offers 15 plans, while Medshield provides 10, with both schemes registered as non-profit organisations under the Medical Schemes Act and regulated by the Council for Medical Schemes. Neither scheme controls or is controlled by other firms.
After assessing the deal, the Commission found it unlikely to reduce competition in the sector and recommended approval without conditions.
However, it flagged public interest considerations, particularly around employment. To address these concerns, both schemes have undertaken not to retrench staff for at least two years after the merger.
The merger is unfolding against the backdrop of Sanlam’s expanding role in healthcare. Fedhealth recently became Sanlam’s exclusive health partner after the insurer parted ways with Bonitas.
At the same time, Medshield’s administrator, Medscheme, is part of AfroCentric Investment Corporation, which Sanlam took majority ownership of in 2023.
This consolidation strengthens Sanlam’s footprint in the health insurance space, aligning product offerings and administration under a more integrated model.
For members, Fedhealth has hinted at a revamped scheme set to launch in October 2025. The overhaul is expected to include a refreshed structure, a member-run board of trustees, integrated health and insurance products, and expanded wellness rewards.
The scheme sees the merger and Sanlam partnership as key to scaling its business, growing its corporate client base, and ensuring long-term sustainability.
Should the Tribunal give its approval, the merger will create one of the largest open medical schemes in the country, combining Medshield’s roughly 140 000 members with Fedhealth’s 108 000.
Analysts say the development underscores the growing pressure on schemes to offer affordable, value-driven health cover in a competitive market.
The Competition Tribunal will now review the Commission’s recommendation before making a final ruling.
