Abstract
Within today’s competitive and cost-driven business environment, Medical Scheme
Administrators are under tremendous pressure to ensure their operations are at the pinnacle of
financial performance, through stable but profitable business structures, whilst achieving
maximum return for member’s contributions. The purpose of the study was to identify the
factors that affect the optimal cost management practices is to ensure that organisations have a
true understanding of costs, so that it can continuously make the right decisions with regards
to product mix, price and market. This research uses a qualitative methodology to uncover how
the South African Medical Scheme Administrators currently use costing principles. This is
achieved through semi-structured interviews with individuals, who are directly responsible for
this function within their respective organisation. The study concluded that a conceptual cost
management framework, which is made up of a number of key models to assist an organisation,
is more frequently used in more mature organisations.