BACKGROUND Misdiagnosis may be a significant and under-recognized quality of care problem. In birthing facilities located in anurban Philippine setting, we investigated the diagnostic accuracy for three obstetric conditions: cephalopelvic disproportion (CPD), post-partum hemorrhage (PPH), and pre-eclampsia. DESIGN Identical simulated cases were used to measure diagnostic accuracy for every provider (n=103). We linked misdiagnosis - identified by the simulated cases - to obstetrical complications of the patients at the participating facilities. Patient-level data on health outcomes and costs were obtained from medical records and follow-home in-person interviews. RESULTS The prevalence of misdiagnosis among obstetric providers was 29.8% overall, 25% for CPD, 33% for PPH, and 31% for pre-eclampsia. Linking provider decision-making to patients, we found those who misdiagnosed the simulated cases were more likely to have patients with a complication (OR 2.96; 95% CI 1.39-3.77) compared with those who did not misdiagnose. Complicated patients were significantly less likely to be referred to a hospital immediately, were more likely to be readmitted to a hospital after delivery, had significantly higher medical costs, and lost more income than non-complicated patients. CONCLUSION Diagnosis is arguably the most important task a clinician performs because it determines the subsequent course of evaluation and treatment, with the direct and indirect costs of diagnostic error, placing large financial burdens on the patient.