Evergreen Health’s chief executive told the Mill Creek City Council on Sept. 2 that the public hospital district is expanding community services while facing broad financial headwinds tied to labor costs and proposed federal changes to Medicaid funding.

Dr. Ettore Palazzo, chief executive officer and superintendent of King County Public Hospital District No. 2 (Evergreen Health), told the council Evergreen Health is a two‑hospital system with a primary service area of roughly 500,000 residents and a larger service area that exceeds one million people. He said the district relies on a mixture of operating revenue and property-tax levies and that levy funding represents a small but important share of total revenue.

Why it matters: Evergreen Health provides obstetric, neonatal, trauma and specialty services to communities around Mill Creek, and district funding choices affect local access to care. Palazzo said the district is pursuing growth of primary care, behavioral health and surgical capacity while responding to industrywide financial pressures that could force service reductions elsewhere.

Palazzo described the district’s public-governance structure and recent levy action. "We are a public hospital district that has been in existence, for 58 years," Palazzo said. He noted that the district went to voters Aug. 5 with a levy lid lift that passed with 61% approval; the levy rate will increase to 50 cents per $1,000 of assessed value. He said that last year about $6,200,000 in levy funds were directed to community programs including youth mental‑health initiatives, senior services, community health access and hospice/end‑of‑life care.

Palazzo highlighted the district’s care network in the region: Evergreen Health operates a level‑3 neonatal intensive care unit, a trauma center and an urgent care in Mill Creek; it partners with Fred Hutchinson Cancer Center and Seattle Children’s to deliver specialty services on its campus and said it will expand the Seattle Children’s partnership on July 1 to reduce transfers out of the community.

The CEO underscored financial pressures facing hospitals statewide. He cited Washington State Hospital Association data that his presentation summarized as operating losses approaching $5 billion statewide over recent years and said that rising labor costs outpaced reimbursement increases. Palazzo warned federal proposals could reduce Medicaid matching funds over time; he said those cuts would increase uncompensated care and could force service changes or closures at financially vulnerable hospitals.

Councilman Stecker asked for more detail about the federal tax-credit changes and the initial effects of Medicaid cuts. Palazzo said the exact effects remain uncertain, but said the initial matching‑fund reductions begin in about two years and that both Medicaid reductions and loss of tax-credit coverage would likely increase the number of uninsured patients seeking care in emergency departments.

Palazzo framed Evergreen Health’s levy lid‑lift plan as a way to expand rather than contract services: increased primary-care capacity, added behavioral-health services, expanded surgical and procedural capabilities and updating equipment and technology. He said Evergreen Health has been rated highly by several hospital‑quality organizations and that the levy funds help preserve community programs that otherwise would be at financial risk.

No city action was taken on Evergreen Health’s presentation. The session served as an informational briefing and an opportunity for council members to ask questions about regional health‑care capacity and the implications of federal policy changes.

The council thanked the Evergreen Health team and asked for follow-up where needed; Palazzo offered to provide more materials on the levy usage and program details via the district’s website and follow-up correspondence.