Hospitals are not just managing clinical risk when a handoff fails, or a referral goes nowhere. They are managing reimbursement risk. The Centers for Medicare & Medicaid Services’ Hospital Readmissions Reduction Program can dock payments by up to 3% for excess avoidable readmissions. CMS reported that the share of hospitals facing a penalty of 1% or more is rising again for fiscal year 2026, up from roughly 7% of hospitals the year before to over 8%. Layer on the Hospital-Acquired Conditions Reduction Program and Hospital Value-Based Purchasing, and a meaningful share of a health system’s income now depends on exactly the kind of coordination that fragmented communication undermines.
This is not an abstract policy point. It is the daily reality of discharge planning, transitions to skilled nursing facilities, and follow-up after an ED visit, the precise moments where a missed call, an unanswered page, or a referral that never reached the right inbox turns into a readmission, a denied claim, or a sentinel event.
And the patient safety data that backs this up is stark. In its analysis of 2024 sentinel events, The Joint Commission found that communication breakdowns, missed handoffs, inadequate escalation of changing patient status, incomplete information in the electronic health record — sit among the leading contributing factors across the categories that make up the vast majority of reported sentinel events, from falls to delays in treatment to wrong-site surgery. The Agency for Healthcare Research and Quality and The Joint Commission have both identified handoff communication as a national patient safety priority for exactly this reason.
Despite all the investment in digital transformation, I still see the same pattern again and again, across health systems globally: clinicians relying on pagers, phone calls, secure-but-disconnected texting apps, and the fax machine (still very much alive), just to get a patient safely from one part of the system to another. It works, until it doesn’t. And when it doesn’t, the gaps in visibility, accountability and continuity of care fall hardest on exactly the patients the US system is least well set up to protect: dual-eligible beneficiaries moving between hospitals, skilled nursing facilities, qualified health centers and home health agencies that often run on different EHR platforms with limited ability to talk to one another.
Electronic health records have transformed what we can capture about a patient. But it is worth being honest about what those systems were built to do; but coordinating a real-time, multi-team workflow that spans a referral, a diagnostic result, a bed request, and a discharge plan simultaneously is a very different requirement. The result is that clinicians and case managers are still doing the coordination by hand: chasing down whether the skilled nursing facility received the transfer summary, whether the cardiology referral was actioned, whether the home health order ever reached an agency with capacity to accept it.
It would be reasonable to assume that federal interoperability policies are solving this. However, another global order to tie patient records goes only part way to connecting hospitals, health systems and federal agencies by moving millions of records and pressing providers and payers toward real-time, FHIR-based data exchange. That is genuinely important progress, and it solves a real problem: getting a patient’s record to follow them across organisational boundaries. But access to a record is not the same thing as coordination of a task. Knowing that a discharge summary exists and is technically retrievable through a health information exchange is a different problem from knowing, in real time, that the home health referral attached to it has been picked up by an agency with capacity to act on it. Interoperability gets the data to the door. It does not knock and confirm that someone answered.
This is where the gap shows up in practice, and it is also where it quietly drives clinician burnout. The American Medical Association’s most recent national physician data show burnout symptoms affecting 41.9% of physicians in 2025 an improvement on prior years, but still concentrated heavily in hospital-based specialities, with emergency medicine at the very top of the list at close to 50%. I recognise that number personally. I still work clinical shifts as an emergency physician in the NHS, and the texture of that burnout is rarely the clinical decision-making itself. It is the open loops: the test you ordered and now have to chase, the referral you cannot confirm was received, the handover you have to repeat three times because the right person never got the first version.
That friction is not unique to any one health system, but my understanding is that the US adds a distinctive layer to it: every one of those open loops carries a financial consequence as well as a clinical one, because payment policies have made care coordination a condition of full reimbursement, not just good practice.
As more US health systems take on risk-based contracts, ACO participation and value-based arrangements, that visibility becomes a strategic asset, not just an operational nicety. The same infrastructure that closes the loop on a referral also closes the loop on the readmission penalty, exposure and the quality measures that determine a portion of next year’s reimbursement.
Nowhere is this sharper than in rural and safety-net hospitals, which depend most heavily on payer revenue and have the thinnest margins to absorb a readmission penalty or a denied claim. These are also the facilities least likely to have a fully staffed case management team, most likely to be sending and receiving referrals from under-resourced partners, and most exposed when a patient’s coverage lapses mid-treatment during a redetermination cycle. For these organisations in particular, communication infrastructure is not a nice-to-have layered on top of clinical care, it can be one of the few levers available to protect both patients and margin at the same time.
So, the core question for US health system leaders evaluating their next digital investment should not be “do we have enough digital transformation”. Most systems already have too many tools. The right question is whether those tools connect information to action, in a way that is visible, accountable and tied to the whole patient pathway because the cost of fragmented communication is no longer just a quality problem. It is a quantifiable, recurring line item on the hospital’s bottom line.
As healthcare continues to shift further toward value-based and risk-bearing payment models, I do not think the core challenge ahead is more technology. It is better connected communication infrastructure because the financial sustainability of health systems will depend not only on better clinical tools, but on creating environments where teams can coordinate effectively across the entire patient journey, from the emergency department to the skilled nursing facility and back home.
