The Dutch hospital sector has recently been the subject of two divergent national policy initiatives. Following a mixed experience with regulation in the mid-1980s, the national government has now taken the first steps in a radical shift toward market-based competition. This article suggests that neither official strategy can address the fundamental structural and cultural factors that shape institutional behavior in the Dutch hospital system. Drawing upon empirical evidence from two 1987 hospital case studies, this article contends that Dutch hospital management reflects a precentralized insularity which, in turn, sharply reduces the likelihood that either publicly or privately framed decentralized strategies can be successfully implemented.