Medicine: Don't Break a Leg in Texas

As federal money dries up, rural hospitals are failing fast

For a century the inhabitants of tiny St. Ignatius, Mont. (pop. 1,000), had a hardscrabble little hospital to tend their more serious wounds and ailments. Then five years ago, the 18-bed Mission Valley Hospital ran into trouble. Spiraling medical costs and difficulty attracting doctors were partly to blame. But the real crunch was that, with new limits on reimbursements, Medicare no longer paid what it cost to treat the hospital's mostly elderly patients.

With 40% of its total billings coming from Medicare, Mission Valley, with annual revenues of more than $1 million, began losing between $29,000 and ; $50,000 a year....

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