Sunk-Cost Fallacy
Hey, Its Del!
In my last email, we unpacked how fuzzy logic can cause leaders to justify keeping poor-performing partners—often at the expense of the team’s trust and patience. Judging by some of the responses, it seems some of you may have been battling another mental gymnastics move: the sunk-cost fallacy.
Think of it as loyalty to a bad decision just because you’ve already paid the price—whether it’s in time, money, or headaches. When it comes to PBMsand ancillary service providers, this fallacy can trap you into sticking with partners who overpromise, underdeliver, and never fail to invoice on time.
So how do you outsmart this cognitive trap?
Let’s Dive In!
The sunk cost fallacy is the tendency to stick with a failing strategy or partnership simply because of the resources or time already invested.This cognitive bias can have significant financial, operational, and clinical repercussions, particularly when decisions directly impact efficiency and outcomes.
For example:
Inefficient PBMs: Sticking with underperforming contracts can result in higher drug costs, poor patient outcomes, and limited transparency.
Outdated Ancillary Services Technology: Using outdated systems leads to operational inefficiencies, missed savings opportunities, and increased patient dissatisfaction.
Recognizing and addressing this bias is critical to improving performance, reducing costs, and optimizing patient care.
Where Do We Begin?
Here are a few savvy strategies to break free from the sunk cost trap and make sharper, more impactful decisions:
Think like a chess master: Stop making moves based on the board you wish you had. Evaluate your partners for their current performance, not past investments.
Use the “prodigy test”: If a brilliant, unbiased outsider reviewed your PBM and ancillary situation, what would they recommend? Hint: they’d probably suggest cutting your losses and calling Prodigy.
Make it a math problem: Focus on future returns, not sunk costs. If your current partner isn’t delivering value now, they’re unlikely to magically transform later.
Be a talent scout: Look for partners who are hungry, innovative, and aligned with your goals—prodigies who can outplay your current bench.
Recruit your team as your panel of judges: The rank and file often have a clear-eyed view of who’s delivering value and who’s just coasting. Lean on them for their expertise.
Hot tip! Test-Drive a Better Fit: Not ready for a full switch? Try before you buy. Pilot a new vendor on a small scale and let real results show you why change is worth it. If you’d like to test a PBM or ancillary solution before fully committing, try Prodigy.
The brilliance of breaking free from the sunk-cost fallacy is that it creates space for partners who will amplify your success rather than weigh you down. In other words: don’t be afraid to trade up.
Got a story about spotting—or escaping—this trap? Share it with me; I’d love to feature a real-world prodigy move in my next email.
Ready? Let’s chat.
