Introduction: The cost of medical care has risen dramatically in the last decade, due to various factors. It is important for us to know regarding the actual cost of providing medical care especially the core services in hospitals.

Aim: To study a cost analysis of operative services at a tertiary care hospital including valuations of the operation  theater as a cost center, specialty services in the operation theater, utilization of services and compute unit cost for service rendered and analysis.

Methods: All the activities in the operation theatre were critically analyzed for 3 months. All input resources in to the OT such as capital cost, expenditure, maintenance cost, etc. was collected from accounts, stores and maintenance departments respectively to valuate OT as a cost center and unit cost per hour of operating of room was calculated.

Results: In this study the unit cost of Operating room per hour was found to be around  Rs.2,511.50 per hour and the operating room utilization was found to be 18.28% (Resource hour utilized 807 hours in 3 months: Resource hour available 4416 hours in 3 months).

Conclusion: This study highlights that there is a need to integrate cost accounting with hospital management information system, so that decision making can be based on credible data, thereby leading to better utilization of resources.