South African venture capital firm Knife Capital has invested in Cape Town-based healthtech startup Alignd, betting on a healthcare financing model that has already helped medical insurers save an estimated R600 million ($36 million) by reducing unnecessary medical spending and improving patient outcomes.
The investment, made through Knife Fund III, will support Alignd’s expansion into maternity and kidney care, extending a model initially developed for palliative care into two of the most complex and costly areas of healthcare.
The companies did not disclose the size of the investment.
Founded in 2018, Alignd is seeking to change how South Africa’s private healthcare system pays for medical treatment. Rather than rewarding hospitals and healthcare professionals based on the number of procedures performed or services delivered, the company develops payment arrangements that link compensation to patient outcomes and the quality of care provided.
The approach challenges the traditional fee-for-service model, under which healthcare providers are typically reimbursed for individual consultations, treatments and procedures regardless of whether those interventions produce better long-term health outcomes.
Alignd works directly with medical schemes, designing healthcare programmes that align the financial interests of insurers, medical professionals and patients while reducing unnecessary expenditure.
Its first major test came in palliative care, where patients with life-limiting illnesses often receive expensive hospital-based treatment despite potentially benefiting more from coordinated care at home or in hospice facilities.
Alignd developed a network of more than 500 healthcare providers to deliver home-based palliative care, allowing patients to receive treatment and support outside traditional hospital settings.
According to the company, the programme has generated approximately R600 million in savings for participating medical schemes. About two-thirds of enrolled patients died at home or in hospice care, while chemotherapy administered during the final month of life declined by 33%.
The programme now covers more than 3.3 million beneficiaries through partnerships with seven South African medical schemes, including GEMS, Fedhealth and Bonitas.
The results have provided Alignd with a commercial foundation for expanding into other healthcare segments where fragmented treatment, poor coordination and rising medical costs place significant pressure on insurers and patients.
“South Africa’s private healthcare system largely pays for activity rather than outcomes, and patients and their families often carry the cost of that misalignment,” said Dr. Lungi Nyathi, Alignd’s chief executive officer.
“In palliative care, we’ve shown that when patients, providers, and schemes pull in the same direction, and the system around that care is well-designed, the quality of care goes up and unnecessary spend comes down.”
The new funding will help Alignd establish coordinated maternity care programmes designed to improve outcomes for mothers and newborns while connecting expectant parents with healthcare providers and medical schemes.
The company is also targeting chronic kidney disease, a condition that can require years of expensive treatment, including dialysis and other specialist interventions.
Its kidney care programme will focus on slowing disease progression, preserving kidney function and improving patients’ quality of life while helping medical schemes manage long-term treatment costs.
Both programmes represent an opportunity for Alignd to demonstrate whether its outcome-based payment arrangements can deliver similar financial and clinical improvements beyond end-of-life care.
“Knife Capital’s backing, and their experience in scaling businesses locally and abroad, gives us the support to take that model into maternity and kidney care, where the need is just as urgent,” Nyathi said.
For Knife Capital, the transaction adds to its growing portfolio of healthcare technology investments and reflects investor interest in businesses addressing structural inefficiencies in Africa’s healthcare systems.
Unlike consumer-facing digital health startups that primarily offer consultations, appointment bookings or remote medical services, Alignd operates behind the scenes, working with medical schemes and healthcare providers to redesign how treatment is funded and delivered.
That business-to-business approach gives the company access to large pools of insured patients through institutional partnerships rather than requiring it to acquire individual consumers.
“Alignd stood out to us because this is a women-founded team that has taken on a difficult problem in healthcare and proven that there is a better way to deliver care,” said Catherine Young, partner at Knife Capital.
“The outcomes they are achieving are meaningful for the patients, providers, and medical schemes. It is exactly the kind of business we want to back, and it further strengthens the healthtech vertical we are building at Knife Capital.”
The investment comes as healthcare systems across Africa face growing pressure to contain treatment costs while expanding access to quality services.
For Alignd, the next challenge will be translating its success in palliative care into maternity and kidney care, where treatment pathways, patient needs and financial incentives differ considerably.
If the company can replicate its reported savings and clinical improvements, its model could offer medical schemes a way to contain healthcare costs without compromising patient care.
For Knife Capital, the investment is a bet that improving how healthcare is financed and delivered can become a scalable business opportunity, rather than simply a cost-saving exercise for insurers.