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Application of "Value Engineering" to Rationalize the Cost of Cataract Surgery in Eye Clinic at Tata Main Hospital

S.P. Jakhanwal, G.B. Singh

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Key Words: Value Engineering, Cost of Cataract Surgery.

Key Messages:

  • The concept of Value Engineering (VE) can be successfully utilized to rationalize the cost of cataract surgery.
  • Functional Analysis System Technique (Fast) is very useful in assessing functional relationships.
  • (Concept of Value Engineering should be tried in other areas of Hospital Management to cut unnecessary cost and run the service most cost effectively without sacrificing quality of service.


Increasing awareness, advancing technology, involvement of private and corporate sectors as Health providers have increased cost of health care tremendously in last few decades. Hospitals have virtually taken the shape of industry and cost effectiveness is essential to compete as an industry. “Value Engineering” (VE) is an industrial tool (developed by D. Miles of GEC in the Fifties) for cost reduction and improvement of product performance by system approach, and is widely used presently both in industry and government the world over.

The present project utilized this industrial tool (VE) successfully to rationalize the cost of cataract surgery at Tata Main Hospital, Jamshedpur leading to an estimated saving of Rs. 2.5 lakh annually. Hence it is proposed that as in other industries, this useful “VE” technique can be profitably applied in Hospital management also to reduce redundant cost and run the service more cost-effectively without sacrificing quality.


Cost of health care has increased tremendously in last few decades. Advanced technology, increasing knowledge and awareness among people about health are main factors for this change. Involvement of corporate and private hospitals as Health Providers have completely changed concept of a modern hospital. Hospitals have come up as profit making centers and are virtually being recognized as an industry. In this era of competition, each health provider will have to be cost-effective like other industries, so that they are able to provide the best service at least cost-attracting more customers.

“Value Engineering” (VE)-(developed by Lawrence D. Miles of GEC in Fifties) – is one of the most widely used tool for cost reduction in industries the world over. It is the systematic application of recognized techniques by multi-discipline team, which identifies the function of a product or service, establishes a worth for the function, generates alternatives through the use of creative thinking, and provides the needed function reliably at the lowest cost.

Tata Main Hospital is one of the biggest industrial hospitasl in our county, which provides free medical treatment to its 60,000 employees and their families. In the present study, we have taken help of the same industrial tool, i.e. “VE”, to rationalize the cost of cataract surgery in our eye clinic.

Principles of “VE” have been alluded to in brief at relevant places to make its application more easily understandable for medical personnel. Its theory, principles and steps for analysis have already appeared as books and monographs, e.g., Parker (1988), Iyer (1996) and Lomash (1997).

Material and Methods

Eye Clinic of Tata Main Hospital, Jamshedpur (TMH) with large turn-over of eye cases including 1100 Cataract operations, in the period Apr. 2000 – March 2001 provided the needed material and background for the project.

Principle of “VE” explained by authors referred to above, was applied following protocols set in “Value Engineering Guide” published by INVEST, East Zonal Council, Jamshedpur, with minor modifications at places to suit the situation.

Application of “value engineering”

Steps of “VE” Study as applied to our project are explained hereunder:

Orientation Phase:

Objective: To select a Specific Project and a Team:

This requires Identification of “high cost/low value” area; Analyze and evaluate projects for potential; and then finally, select the project for “VE” study.

1. Cataract is the most important cause of curable blindness in our country, the treatment of which is Cataract Extraction.

2. In TMH Eye Clinic, 98.5% of surgical cases admitted in Jamshedpur Eye Hospital (JEH) were for cataract extraction.

3. Most part of the budget expenses (98%) was incurred and utilized for cataract extraction only.

Cataract Extraction Surgery was thus, identified as a most suitable “high cost” area for the study.

Hence, with an objective of reducing the cost of this “high cost area” we undertook the Project. A team consisting of doctors of eye clinic was formed and authorized to carry on the Project.

Information Phase

Objective: To provide a thorough understanding of the system, operation protocol or item under study by in-depth review of all the pertinent factual data.

Collection of complete information is essential to provide foundation upon which the entire “Value Engineering” Study is based.

Detailed pertinent information and data collected by the team are as follows:

1. In the last six years number of admission in eye clinic has almost doubled, i.e., from 597 in 1995-96 to 1163 in 1999-2000.

2. Operation for Cataract extraction amounts to 98.5% of total admission.

3. The Team studied the present protocol followed for cataract surgery at JEH.

4. Patients are operated both in the morning as well as in the evening half of the day as per schedule of OT allotment to respective surgeon.

5. Admission Time:

  • Morning cases are admitted on previous day 2nd half.
  • Evening cases are admitted on the same day 1st half.

6. Discharge Time:

  1. Patients are discharged after dressing next day
  2. Cases operated on Saturdays are to overstay till Monday next as no discharge is made on Sundays at JEH.
  3. Even after morning discharge some patients overstay and leave hospital in the evening.

7. Data showed as follows:

(a) Average Hospital stay:

Year 97-98 98-99 99-00
Hosp. stay:days 3.08 2.75 2.33

(b) Bed Charges at JEH: Rs. 200/- per day; Rs. 100/- for half day.

© Number of operation on Saturdays: 150 per year approx.

Dept. of Ophthalmology, Tata Main Hospital, Jamshedpur For correspondence:
MIG-7, Sangam Vihar Jamshedpur - 931011

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