Abstract Background Despite the great confidence of Western governments in the principles of New Public Management (NPM) and its ability to stimulate “healthcare entrepreneurship”, it is unclear how policies seeking to reform healthcare services provoke such entrepreneurship in individual institutions providing long-term healthcare. This study examines such situated responses in a Dutch nursing home for elderly people suffering from dementias such as Alzheimer’s disease. Methods A four-year inductive longitudinal single-case study has been conducted. During this time period, the Dutch government imposed various NPM-based healthcare reforms and this study examines how local responses unfolded in the nursing home. Through interviews conducted with managers, administrators and supporting staff, as well as the examination of a large volume of government instructions and internal documents, the paper documents how these reforms resulted in several types of entrepreneurship, which were not all conducive to the healthcare innovations the government aspired to have. Results The study records three subsequent strategies deployed at the local level: elimination of healthcare services; non-healthcare related collaboration with neighboring institutions; and specialization in specific healthcare niches. These strategies were brought about by specific types of entrepreneurship – two of which were oriented towards the administrative organization rather than healthcare innovations. The study discusses the implications of having multiple variations of entrepreneurship at the local level. Conclusion Governmental policies for healthcare reforms may be more effective, if policymakers change output-based funding systems in recognition of the limited control by providers of long-term healthcare over the progression of clients' mental disease and ultimate passing.