ImportanceMany pulse oximeters have been shown to overestimate oxygen saturation in persons of color, and this phenomenon has potential clinical implications. The relationship between overestimation of oxygen saturation with timing of COVID-19 medication delivery and clinical outcomes remains unknown.ObjectiveTo investigate the association between overestimation of oxygen saturation by pulse oximetry and delay in administration of COVID-19 therapy, hospital length of stay, risk of hospital readmission, and in-hospital mortality.Design, Setting, and ParticipantsThis cohort study included patients hospitalized for COVID-19 at 186 acute care facilities in the US with at least 1 functional arterial oxygen saturation (SaO2) measurement between March 2020 and October 2021. A subset of patients were admitted after July 1, 2020, without immediate need for COVID-19 therapy based on pulse oximeter saturation (SpO2 levels of 94% or higher without supplemental oxygen).ExposuresSelf-reported race and ethnicity, difference between concurrent SaO2 and pulse oximeter saturation (SpO2) within 10 minutes, and initially unrecognized need for COVID-19 therapy (first SaO2 reading below 94% despite SpO2 levels of 94% or above).Main Outcome and MeasuresThe association of race and ethnicity with degree of pulse oximeter measurement error (SpO2 − SaO2) and odds of unrecognized need for COVID-19 therapy were determined using linear mixed-effects models. Associations of initially unrecognized need for treatment with time to receipt of therapy (remdesivir or dexamethasone), in-hospital mortality, 30-day hospital readmission, and length of stay were evaluated using mixed-effects models. All models accounted for demographics, clinical characteristics, and hospital site. Effect modification by race and ethnicity was evaluated using interaction terms.ResultsAmong 24 504 patients with concurrent SpO2 and SaO2 measurements (mean [SD] age, 63.9 [15.8] years; 10 263 female [41.9%]; 3922 Black [16.0%], 7895 Hispanic [32.2%], 2554 Asian, Native American or Alaskan Native, Hawaiian or Pacific Islander, or another race or ethnicity [10.4%], and 10 133 White [41.4%]), pulse oximetry overestimated SaO2 for Black (adjusted mean difference, 0.93 [95% CI, 0.74-1.12] percentage points), Hispanic (0.49 [95% CI, 0.34-0.63] percentage points), and other (0.53 [95% CI, 0.35-0.72] percentage points) patients compared with White patients. In a subset of 8635 patients with a concurrent SpO2 − SaO2 pair without immediate need for COVID-19 therapy, Black patients were significantly more likely to have pulse oximetry values that masked an indication for COVID-19 therapy compared with White patients (adjusted odds ratio [aOR], 1.65; 95% CI, 1.33-2.03). Patients with an unrecognized need for COVID-19 therapy were 10% less likely to receive COVID-19 therapy (adjusted hazard ratio, 0.90; 95% CI, 0.83-0.97) and higher odds of readmission (aOR, 2.41; 95% CI, 1.39-4.18) regardless of race (P for interaction = .45 and P = .14, respectively). There was no association of unrecognized need for COVID-19 therapy with in-hospital mortality (aOR, 0.84; 95% CI, 0.71-1.01) or length of stay (mean difference, −1.4 days; 95% CI, −3.1 to 0.2 days).Conclusions and RelevanceIn this cohort study, overestimation of oxygen saturation by pulse oximetry led to delayed delivery of COVID-19 therapy and higher probability of readmission regardless of race. Black patients were more likely to have unrecognized need for therapy with potential implications for population-level health disparities.