The sunk-cost fallacy
When I visit dental practices I often see examples of the sunk-cost fallacy. I’ve even fallen victim to it myself on occasion.
The sunk cost fallacy is when we keep doing something even when changing direction is a more sensible idea. We keep going due to the time, money, or emotional energy we’ve already put in. We don’t want to admit we made a mistake.
In many of the cases where I see a dentist doing something clinically or financially counterproductive the sunk-cost fallacy is at work.
Here’s a personal example.
Years ago I bought a CAD/CAM machine to make porcelain inlays and onlays. In spite of my most conscientious efforts I couldn’t produce results that were as good or as time effective as laboratory made inlays or onlays.
I should’ve written off the $60,000 I spent on the machine and gone back to doing laboratory made inlays and onlays. Instead I persevered well beyond the point where it made any clinical or economic sense.
The reason was that I was emotionally and financially invested in the machine and didn’t want to admit that I’d made a mistake. The $60,000 was a sunk-cost and I wanted to make it pay off, no matter what.
In your practice of dentistry do you have any sunk-costs that you should abandon? Examples might be:
An expensive piece of equipment such as I mentioned above.
A staff member who you’ve invested a lot of effort into training but who has never performed up to standard.
A treatment technique that you learnt at a weekend course that produces erratic, unreliable results.
An advertising program you spent ages designing that’s not bringing in patients.
A practice renovation that doesn’t flow well.
A branch practice that you have to subsidise every month because it doesn’t break even.
A software system that’s hopelessly behind the times but you keep it because you feel comfortable with it.
An implant system that’s no longer state-of-the-art but you have all the equipment for it.
A large supply of composite filling material that you bought on special but that you find hard to use.
My recommendation in all these situations is to cut your losses, recognise you made a mistake (we all do!), take the hit and move on. The day I finally admitted my mistake and ditched my CAD/CAM machine was such a relief.
My only regret was that I hadn’t done it much sooner.
