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Definition: Reimbursements

In marketing parlance, reimbursement refers to revenue and the process of collection of revenue. Marketing mostly concentrates on business development, product development, promotion etc. and quite often ignores reimbursement methods from its planning. In the absence of any proper revenue collection processes, the reimbursement function becomes very difficult to manage and for the marketers perspective reimbursement is mostly a side concern. This puts business in problematic situation especially where reimbursement process is complex.

In order to avoid such situations, the business organizations which rely on complex reimbursement process look towards combining the reimbursement functions with marketing function. Reimbursement function can also be referred to as the revenue function, but whenever a business sells goods to its customers or provides its services to its customers and the payment collection is done from any third party, the term reimbursement is used more often. This kind of situation is mostly observed in health care sector. People take insurance policies and get a card from them which authorizes the policy holder to present that card at the hospital (if the hospital is in the list of partners of the third party association (TPA)) and all the bills will be settled by claim form insuring company via the third party association.

The customer is free from hassles but the hospital’s revenue are left pending till the point the claim formalities are performed and the payment is made. It is not very common in India but in countries like USA it is a very common practice as health insurance is taken very seriously there. Let us consider the following example for Indian context –

MDIndia Healthcare Services (TPA) Pvt Ltd is a third party association which is associated with The New India Assurance Company Limited. It has tie-ups with hospitals and is responsible for their reimbursements for any claims from New India Assurance Co Ltd.


Hence, this concludes the definition of Reimbursements along with its overview.

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