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The Palo Seco Hospital, founded in 1907 as a leper colony by the Isthmian Canal Commission under the direction of William C. Gorgas, played a central role in the canals and later national health policy. Over more than a century, its mission evolved from isolating people with Hansen's disease (leprosy) to becoming a long-term care hospital for the chronically ill and elderly. This article reconstructs its institutional history, its social life, administrative changes, its decline and closure in 2011, as well as its heritage and healthcare legacy. Based on primary sources such as legal documents, journalistic reports, and memoirs, it offers a rigorous and well-documented account for historical, journalistic, and archival purposes.