He gives the option of healing them at no cost. However, the Vault Dweller must have an injury and good Reputation to even be treated by the doctor. He refuses his services based upon bad deeds and reputation.
With the Vault technology, he can treat basic injuries, remove radiation, and heal crippled limbs. Of course, the more serious the injury, the more time the operation will take. Also, the Vault Dweller can ask for more stimpaks or chems, but must pass a mediocre Speech check to get either.
If the Vault Dweller has Intelligence less than 4 the medic will give him a stimpak every time they talk to him.