Employee job satisfaction plays a critical role in determining service quality in health institutions. This study examines the impact of pay, promotion opportunities, supervision, co-worker relationships, and job nature—on customer service quality in selected health institutions in Bahir Dar City. Using a crosssectional research design with a mixed-method approach, data were collected from 150 health employees through structured questionnaires and interviews. The results indicate a strong positive correlation between employee satisfaction and service quality, with pay (r = 0.701, p < 0.01) and supervision (r = 0.636, p < 0.01) emerging as significant predictors. Multiple regression analysis further confirmed that enhanced job satisfaction Significantly improves service delivery outcomes. The study concludes that improving employee motivation, fair remuneration, and professional development opportunities can enhance service quality in the health sector.