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A SIR epidemic model is proposed to understand the impact of limited medical resource on infectious disease transmission. The basic reproduction number is identified. Existence and stability of equilibria are obtained under different conditions. Bifurcations, including backward bifurcation and Hopf bifurcation, are analyzed. Our results suggest that the model considering the impact of limited medical resource may exhibit vital dynamics, such as bistability and periodicity when the basic reproduction number ℝ0 is less than unity, which implies that the basic reproductive number itself is not enough to describe whether the disease will prevail or not and a subthreshold number is needed. It is also shown that a sufficient number of sickbeds and other medical resources are very important for disease control and eradication. Considering the costs, we provide a method to estimate a suitable treatment capacity for a disease in a region.