He gives the option of healing the player character 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 on 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.
With low enough Intelligence (less than 4), the medic will give a stimpak every time they talk to him.