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Dementia is a clinical diagnosis without curative treatment. It is uncertain whether ancillary testing is beneficial for patients. This study investigates the association between use of diagnostic tests and time to poor outcome and health care costs. Nationwide register-based cohort study using health care reimbursement data in the Netherlands. All Dutch hospitals, including 13,312 patients diagnosed with dementia in 2018. Diagnostic testing included computed tomography or magnetic resonance imaging (CT/MRI), neuropsychological examination (NPE), nuclear imaging (PET/SPECT), electroencephalography (EEG), and cerebrospinal fluid (CSF) testing. We compared time to poor outcome (institutionalization or death) and costs per month from 2018 to 2021 between those who underwent a specific diagnostic test in previous years to controls, propensity score matched for age, sex, type of hospital, and comorbidity. Time to poor outcome in those who underwent CT/MRI, EEG, or CSF testing was similar to those who did not, but was longer for those who underwent NPE. Time to poor outcome was shorter in patients who underwent PET/SPECT. Patients who underwent CSF testing or PET/SPECT had higher mean total health care costs as compared to controls (CSF €248, 95% CI 64-433; PET/SPECT: €315, 95% CI 179-451). NPE during the diagnostic trajectory was associated with lower total health care cost (–€127, 95% CI –62, –193). NPE was associated with longer time to poor outcome and lower health care costs, potentially due to confounding by indication. Patients who underwent neuroimaging (CT, MRI, SPECT/PET), CSF testing, or EEG for dementia diagnostics did not experience a longer time to poor outcome or lower health care costs. This emphasizes the importance of clinical examination as anchor for the diagnosis of dementia. [ABSTRACT FROM AUTHOR]