Reading Material for the Prevention of Blindness Workshop

Cost Containment Strategies

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Cost Containment Strategies

  • Daily Planning: In addition to long range or annual planning it is essential to plan for the next day and ensure that all resources/supplies are organised and all concerned staff are informed. The patient load, availability of staff and requirement of supplies can be determined with a high level of reliability the previous day. Emergency procurements and delays in service delivery increase the cost.

  • Clinical Process: A patient protocol based on an integrated path for diagnosis, investigations, admission, surgery and follow-up would substantially reduce delays and associated costs.

  • Personnel Costs: Hospital is a labour intensive organisation. Staff salaries constitute a major percentage of the total operating expenditure. Hence, it is important that salary packages are designed keeping this in view. Incentives linked to surgeries adversely affect the cost reductions that come from increased productivity.

  • Work Culture: Developing a positive work culture reduces bureaucracy, promotes teamwork and a commitment to patient care. All of these have a very direct impact on costs.

  • Local Production of Consumables:4 Many housekeeping supplies, bandages, cotton pads, swabs, etc. can be produced locally (if less expensive than buying them). This also gives an opportunity to involve the clinical staff when there is no patient care.

  • Managing Seasonal Variations:5 Pro duc t ivity is governed by the patient load, which tends to have seasonal and also daily fluctuations. It is necessary to find ways of accommodating the demand and, when this is not possible, activities like staff training, painting or vacation time for staff can be scheduled accordingly.
  • Appropriate Use of Human Resources: Since salaries are a major element of fixed costs, these require special attention. The ophthalmologist’s time is both expensive and in limited supply. Delegat ing routine, repetitive and measurement related clinical tasks to well trained ophthalmic technicians can signifi cantly increase the productivity of the ophthalmologists.

  • Community Participation in Outreach: One resource that is hardly used is the community. In many programmes, the hospital staff does the publicity, arranges a campsite, necessary furniture, etc. All these activities can be better carried out by the community, often at no cost to the hospital. When the community comes in as an equal partner, the camp attendance also goes up.

  • Other Strategies: These include devel-oping in-house competence for instruments/equipment maintenance, instituting appropriate recycling systems for waste products, regular review of cost data and administrative systems, such as daily review of revenues and expenditures, control over expenses through formal procedures for approval, and independent audit of all internal records.

Role of Hospital Administrator

The above principles and strategies need to be translated into action and systems appropriate to local settings and day-to-day practice. These systems require periodic review and changes, arising out of new developments, changes in the infrastructure, staffing or patient complaints or suggestions. It requires a person who can pay constant attention and be responsible – one of the roles of the hospital administrator or manager. For this role to be effective, it is necessary that this person is trained in hospital management and, ideally, does not have a dual clinical role. However, the person needs to work closely with clinical staff to reduce the length of stay, eliminate unnecessary investigations, drugs and therapies, and bring about economies in the use of supplies, facilities and human resources. He or she has to devote enough time and attention in reviewing and improving systems and procedures, such as planning for services and facilities, and scheduling of staff and patients for optimum utilisation of resources to enable cost containment.


Cost containment is a continuous organisational process. A narrow and too simple approach will not necessarily be of benefit. It is a complex interaction of technical, organisational and human factors, which needs committed leadership, good attitudes of staff and a system approach. Higher expenses per surgery do not necessarily mean higher quality. Hospitals that provide quality service, and in large volume relative to their size, tend to have lower unit costs through better systems. On the whole, cost containment should be viewed as one of the strategies to enhance efficiency in eye care delivery.


  1. R D Thulasiraj, R Priya, S Saravanan. High Volume, High Quality Cataract Surgery. Indian Journal of Community Ophthalmology 1997; 3(2): 24–32.

  2. R D Thulasiraj, S Saravanan. Productivity: Getting Cataract Patients Through and Out. J Comm Eye Health, 2000; 13: 22–23.

  3. R D Thulasiraj. Social Marketing for Effective Eye Care Delivery. NPCB Course Material for Training in District Programme Managers, 1995, pp 79–86.

  4. Raymond J Cisneros. Practical Pointers Most Institutions Have a Wealth of Potential Cost Saving Areas. HFM, Oct 1979, pp 47–51.

  5. V K Sahney. Managing Variability in Demand, A Strategy for Productivity Improvement in Health Care Services. Health Care Management Review 1982; 37–41.

Financial Sustainability
B R Shamanna MD MSc

Rakhi Dandona BOpt

Lalit Dandona MD MPH
Gullapalli N Rao MD
International Centre for Advancement of Rural Eye Care
L V Prasad Eye Institute
Hyderabad 500 030

In developing countries it is most important that eye care programmes provide quality eye care services to communities in the long term. However, they must be financially sustainable within a reasonable period of time.1 Methods of sustainability have to be introduced from the very beginning of any eye care programme for these to benefit the community in the long term.
The L V Prasad Eye Institute (LVPEI), a not-for-profit, tertiary eye care hospital in Hyderabad, India, has been involved in setting-up a permanent infrastructure for eye care in underserved rural areas.2–5 Details of this infrastructure, which include rural eye care centres and community program mes, have been described elsewhere.4 From the beginning, barriers to eye care, accessibility, availability and affordability, were taken into consideration. This resulted in the setting up of the first rural satellite eye care centre, the Bhosle Gopal Rao Patel Eye Centre at Mudhol village, in the poor district of Adilabad in the southern Indian state of Andhra Pradesh. Successful and self-sustainable functioning of this Centre prompted LVPEI to develop other rural eye care centres in Andhra Pradesh which are well on their way to become financially self-sustainable. We describe in this article the systems that made Bhosle Gopal Rao Patel Eye Centre financially self-sustainable.
Bhosle Gopal Rao Patel Eye Centre (BGRPEC)


A total of 25 staff, including one ophthalmologist, work at this Centre. The majority of the staff were drawn from local communities, and were trained for varying periods of time at LVPEI. During the training period, area-specific jobs were assigned to staff, with the emphasis on hands-on training. On completion of training, they were recruited as employees of the rural eye care Centre with performance-related increases in salary and promotion.

Service Provision

At this Centre, standard secondary level eye care services are provided utilising reasonable facilities and equipment, and adhering to the highest quality standards. The services provided include refraction, detailed eye examination, medical treatment, and operations such as cataract surgery with an intraocular lens, glaucoma surgery, lid surgery, and lacrimal duct surgery. The systems and staffing of the eye care Centre currently allow for examination of 12,000–18,000 out-patients and 1,200–1,800 operations in a year. The overall infrastructural design, with the necessary additional staffing of BGRPEC, has the capacity to cater for a maximum of 40,000 out-patients and 5,000 operations in a year.

The charter of this Centre calls for the provision of 50% of all services free of cost to the economically underprivileged in the society, with the remaining 50% realised on payment of charges by those who can afford to pay. Patients are triaged in to paying and non-paying categories for eye care service delivery based on their socio-economic status. Assessment is by experienced eye care personnel, called counsellors. For patients who are advised to undergo surgery, the counsellor considers the paying capacity of these patients by assessing the total family income. This includes the possession of a ration card provided to families with a monthly income below a certain level, and possession of other assets. Surgical services for paying patients are offered in a tiered system wherein the type and quality of the surgical services provided are the same and the difference is only in the facility of accommodation. Non-paying patients who are advised surgery are offered the same surgery at no cost to them. In addition to the medical and surgical services, optical and pharmacy shops are an integral part of this Centre. A cafeteria is also available and this caters for the needs of the patients and staff alike.

Capital Investment

Local and international non-governmental organisations and local philanthropists helped LVPEI set up this rural eye care Centre to meet the needs of a population of 500,000, spread over 3 districts in the two states of Andhra Pradesh and Maharashtra. The capital investment towards the setting up this Centre was approximately Rs. 81.3 lakhs (US$ 189,000), details of which are shown in Table 1.
Financial Self-sustainability

The service delivery figures for BGRPEC since the Centre was established have shown an increase in the number of out-patients seen and operations performed. While the ratio of paying to non-paying out-patients was 50:50 (Fig. 1), the operations maintained a ratio of 35:65 respectively (Fig. 2). Average cost-recovery per month for monthly income and expenditure was used as a measure to assess financial sustainability over every 6 months period. Cost-recovery was calculated as a ratio of income divided by expenditure and was expressed as a percentage. Standard formats that are used at BGRPEC for recording income and expenditure on a monthly basis provided the basis for calculating cost-recovery. Recurrent grants received and depreciation (reductions in value) on capital and equipment were not included in these calculations as they are calculated on a yearly basis in our system.

Income resulted from the eye care services provided, sales from optical and pharmacy services, from the cafeteria, and interest on the bank deposit. The surgical services and sales from the optical and pharmacy shops were major sources of income. Expenditure related to salaries of personnel, purchase of medical consumables, optical and pharmacy shop requirements, payment of electricity and other bills, cafeteria, and office expenses.

The average monthly cost-recovery for the operating costs increased from 72.7% in the first half of 1997–98 to 104.3% in the last half of 1998–99 (Fig. 3).

Achieving Financial Self-sustainability

Within 3 years BGRPEC became financially self-sustainable. This achievement can be attributed to the establishment of proper patient-care systems with equal emphases on medical and management systems, well-trained clinical and non- clinical staff working as a team, and the support of the local community.
The standard and quality of clinical care at BGRPEC is a major factor in reaching financial self-sustainability. The quality of service does not differ for those who pay and those who do not pay for the service. BGRPEC is also able to address the barriers to eye care services in relation to accessibility, availability and affordability of the services.
Optimum utilisation of staff, intelligent purchasing and use of consumables through bulk central purchase, and minimum wast age are other factors that have contributed to financial sustainability. BGRPEC has also demonstrated that having strong links with social development organi sations for community relations and mobilisation, and political will, are as important in achieving financial sustainability, as are systems within the Centre itself.
The experience with BGRPEC has demonstrated the importance of good training for clinical and non-clinical staff, a team approach to eye care, provision of good quality eye care services, and community support, all of which can lead to financial self-sustainability. Sustainable and optimally functional eye care systems is an important element of any approach that hopes to substantially reduce blindness in the long-term.6

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