The ship has finally set sail, sending ripples through the medical schemes industry after months of speculation about a possible rift between Sanlam and Bonitas. This month, Sanlam officially dropped anchor with Fedhealth, announcing a partnership that makes Fedhealth its exclusive open medical scheme provider.
Speculation of cracks in the relationship between Sanlam and Bonitas first surfaced in October 2024, with reports suggesting that Sanlam was considering Fedhealth Medical Scheme as its sole strategic partner from 2025.
On 18 October 2021, Sanlam launched Sanlam Health Solutions, a division aimed at providing affordable, flexible, and personalised healthcare solutions. At the time, the company emphasised strengthening its partnerships with both Bonitas and Fedhealth. Bonitas was also one of the medical scheme options available to Sanlam employees, including those at its subsidiary, Santam.
Just three years on, rumours of a pending split emerged, reportedly linked to Bonitas’ dealings with AfroCentric, a company in which Sanlam holds a majority stake.
Established in 2008, AfroCentric is listed in the healthcare sector on the JSE. On 29 May 2023, Sanlam announced the successful acquisition of a 60% controlling stake in AfroCentric Investment Corporation Limited. AfroCentric, a black-owned investment holding company, has significant interests in the healthcare market, including Medscheme, a medical scheme administrator.
The ties between Bonitas and Medscheme date back to 2013, when Medscheme took over the managed-care services for BonCap, Bonitas’ income option. However, this long-standing agreement ended in 2023, raising questions about the reasons behind the split.
In response to an article by Michael Avery in Business Day, “Anatomy of a scandal: Bonitas said to have lost Sanlam’s trust” (14 October 2024), the Council for Medical Schemes (CMS) confirmed that Bonitas had appointed Private Health Administrators (PHA) to manage BonCap. The remaining options continue to be administered by Medscheme, the CMS stated.
In its response, Bonitas: the real anatomy of a scandal is lack of competition (18 October 2024), the CMS argued that “if evergreen contracts persist, it will continue to stifle competition and transformation, and ultimately harm the interests of medical scheme members”.
Although Sanlam officially announced its partnership with Fedhealth on 11 February, employees were informed earlier that, in line with the Sanlam group’s decision to collaborate with Fedhealth as the platform for its leading open medical scheme, all Sanlam and Santam employees on Bonitas would have to migrate to Fedhealth from 1 January 2025.
In a “Q&A for migration to Fedhealth” document shared with employees, Santam addressed concerns about AfroCentric’s role in the transition.
One of the questions is: “I hear that AfroCentric did not have its member administration tender for Bonitas renewed. Is that part of the reason for this change? Why did AfroCentric lose out there?”
Santam explained that AfroCentric presented its bid to Bonitas based on a specific vision for the future of healthcare, focused on developing an open medical scheme in collaboration with Sanlam. However, “the Bonitas board had a different vision for the scheme”.
“AfroCentric’s future lies in closer co-operation and integration with Sanlam Group offerings and the focus on tighter links between wealth and health advice under one umbrella. In these circumstances, the Sanlam Group resolved that it would need to migrate all employees to Fedhealth, which is more closely aligned to our vision and strategy in healthcare.”
In the joint statement announcing the sole partnership with Fedhealth this month, Sanlam stated, “this move supports the group’s strategy to provide a complete health offering to existing and potential clients as part of its overall financial services value proposition”.
Moonstone asked Sanlam whether its exclusive partnership with Fedhealth marks the end of its 2018 partnership with Bonitas or whether business ties remain. It also enquired whether Bonitas’ decision to appoint PHA for BonCap, instead of Medscheme, led to the partnership’s end or whether a separate declined tender played a role. Additionally, Moonstone sought clarity on whether Sanlam stands by Santam’s explanation in the “Q&A for migration to Fedhealth” document regarding the rejected bid and its impact on the Bonitas partnership.
Primrose Mkwanazi, health marketing manager at Sanlam Corporate, repeated that “the partnership with Fedhealth supports Sanlam’s ambition to provide integrated healthcare, insurance, and investment offering to new and existing clients”.
“Bonitas remains a valued client of AfroCentric Group, which continues to provide Bonitas with core administration and managed care services,” Mkwanazi said.
“Sanlam is not in a position to comment on the company that was awarded a Bonitas tender or on the decision-making process of the Bonitas board. The appointment of service providers falls under Bonitas’ sovereign governance.”
Moonstone also approached Bonitas, asking pretty much the same questions.
Lee Callakoppen, the principal officer of Bonitas Medical Fund, responded: “As confirmed by the Council for Medical Schemes, Medscheme remains the administrator of all Bonitas benefit options, except BonCap (which has been administered by PHA since January 2023). Medscheme is a subsidiary of AfroCentric. We are unable to answer for Santam on why they have chosen FedHealth as their sole medical aid provider.”
While both groups are keeping their cards close to their chests, it does seem like an unusual decision.
Bonitas’ 2025 Product Launch review reports 350 505 principal members, 715 856 total beneficiaries, R8.9 billion in reserves, and a 41.5% solvency ratio.
In comparison, Fedhealth’s 2024 member report shows a 36.09% solvency level in 2023, R1.2bn in insurance liabilities to future members (formerly referred to as reserves), 59 040 members, and 107 964 beneficiaries.
However, according to Fedhealth’s principal officer, Jeremy Yatt, the partnership is about more than business.
“By combining Sanlam’s trusted reputation and extensive reach with Fedhealth’s clinical expertise, we are setting a new standard for health and wellness,” Yatt said.
Sanlam group chief executive Paul Hanratty said the conclusion of the group’s partnership agreement with Fedhealth “supports our objective to significantly upweight our health focus”.
For Fedhealth, the agreement aligns with its strategy to expand its presence in the corporate market, leveraging Sanlam’s established client base to attract substantial new corporate members.
Fedhealth will remain an independent entity, governed by a board of trustees made up of scheme members.
Yatt said the partnership is a synergy of two core shared values: customisation and affordability.
Fedhealth provides flexible options, allowing members to tailor their plans and avoid paying for unnecessary benefits.
“This leads to significant cost savings,” he said. “By partnering with Sanlam, we’ll now be able to offer even more money-saving opportunities by means of integrated product offerings, an innovative rewards platform and wellness incentives to our members that encourage them to take further charge of their health.”
In the announcement, Hanratty further noted that the group had already migrated most of its staff to Fedhealth and looks forward to a mutually beneficial partnership.
