Evergreen Health CEO outlines levy lift, financial pressures and plan to expand local specialty care

Doctor Ettore Palazzo, CEO and superintendent of King County Public Hospital District No. 2 (Evergreen Health), briefed the Mill Creek City Council on Tuesday about the health system’s services, recent levy activity and financial pressures facing hospitals across the state.

The presentation: Palazzo described Evergreen Health as a two-hospital system serving parts of King and Snohomish counties and said the organization emphasizes community-focused care. He said the district’s maintenance and operations levy contributes a relatively small but important share of revenue — about 2% for the Kirkland campus and about 7% for Monroe — and that the district redirected roughly $6.2 million last year toward levy-funded community programs such as youth mental health and senior services.

Levy lid lift and planned uses: Palazzo said voters approved a levy-lid lift on Aug. 5 with roughly 61% support; the district will increase the levy rate to 50 cents per $1,000 assessed value. He said the additional levy dollars will be used to expand primary care, behavioral health, surgical capacity, and equipment to meet growing demand.

Statewide financial pressures: Palazzo warned of continued financial challenges for hospitals statewide, including labor-driven expense increases and potential federal Medicaid funding reductions he said could total significant sums over a decade. He cited data showing operating losses across the sector and said the combination of lower reimbursement and higher costs had prompted staffing and service consolidation in parts of the country. "If you cut out $1,000,000,000,000 of funding for an essential service like Medicaid over a decade, only one thing can happen, and that is services will start to look different," Palazzo said, citing concerns that more patients will rely on emergency departments if primary coverage is lost.

Local service growth: Palazzo said Evergreen Health is expanding local specialty capacity, including a strengthened partnership with Seattle Children’s that will allow more pediatric specialty care to remain on the local campus rather than requiring transfers. He described affiliations with institutions such as Fred Hutch for cancer care and highlighted the system’s A and top-50 recognitions for quality and safety.

Council questions: Council members asked about tax credits and potential Medicaid changes; Palazzo said some details are uncertain and that cuts would likely increase uncompensated care and emergency-department use. He estimated that roughly a quarter of Washington residents receive Medicaid benefits and emphasized the potential downstream effects on access and hospital finances.

Ending: Palazzo closed by thanking the council and affirming Evergreen Health’s commitment to serve the Mill Creek community and to partner on local health needs.