Mitigating the Price of Diagnostic Discrepancies: A Multi-Experience Lens on Healthcare Delivery Efficiency

Diagnostic discrepancies, when initial diagnoses differ from those established during treatment, undermine healthcare efficiency, patient outcomes, and costs. Using patient-level data from Florida hospitals, this study examines how such discrepancies affect healthcare delivery efficiency (total charges) and how physicians' experience influences this relationship. Two types of experience are considered: focal (similar cases) and related (diverse conditions). Results show diagnostic discrepancies raise total charges by 9%. Greater focal experience mitigates these costs, while higher related experience increases them. Robustness checks and instrumental variable analyses confirm these findings, highlighting timely, accurate diagnosis as a key operational factor. To reduce discrepancies, healthcare managers can adopt enhanced physician training, decision aids, and experience-based criteria. Strategically allocating experienced physicians and investing in skill development will improve patient care, optimize resources, and curb unnecessary costs, ultimately fostering more efficient and effective healthcare systems.