Friends Hospital, a 197-year-old psychiatric facility in Northeast Philadelphia, has been dropped as a network provider by the company that manages mental health care for low-income patients in Bucks, Montgomery, and Delaware Counties.

Magellan Health Services would not say why it made the move - effective June 18 - but a Delaware County official said it came after a whistleblower alleged that staffing levels were inadequate at Friends.

The hospital denied the allegations and said it planned to "vigorously appeal" the decision with the company this month.

Friends, the nation's oldest private psychiatric hospital, has sought to repair its image since state and city officials raised concerns last year about oversight of patients, including one who committed suicide. State inspectors maintained that the suicide could have been prevented.

The hospital brought in a new chief executive officer, Kenneth Glass, in September, and then lured four doctors away from Temple University Health System. In January, it opened a recovery unit that offers peer support to help patients get reestablished in the community.

Magellan manages the behavioral health care for Medicaid patients in Bucks, Montgomery, and Delaware Counties. It has stopped referring patients to Friends once before - after last year's suicide and other concerns about what a Delaware County official termed "allegations of inappropriate sexual behavior."

Magellan resumed referring patients to Friends this year. But it dropped the hospital again last month, said Karen Upchurch, a spokeswoman for Magellan. She declined to say why, adding that few Magellan patients were at the hospital at the time.

Asked about the reason for Magellan's move, Delaware County health official Jonna DiStefano said the whistleblower letter had come in May from an anonymous former employee, alleging insufficient staffing coupled with too many patients. DiStefano, administrator of the county's office of behavioral health, said she had no further details.

"I know Magellan was working toward finding out what was the real story," DiStefano said.

Greg Matusky, a spokesman for the hospital, said Friends looked forward to persuading Magellan officials to reverse the decision.

"Friends Hospital denies the allegations made by Magellan Health Services and plans to vigorously appeal their decision at a presentation on July 29, 2010," Matusky wrote by e-mail. "Since we were first informed of the decision, we have carefully investigated these allegations and determined that they are baseless."

Founded by Quakers in 1813, the hospital is 80 percent owned by Psychiatric Solutions Inc., a Tennessee company being acquired by Universal Health Services Inc., based in King of Prussia.

The City of Philadelphia stopped using Friends for emergency psychiatric services last year after the suicide. It has continued to use Friends for inpatient care. City officials said they were aware that Magellan had concerns but thought that the hospital was improving.

"We feel that Friends Hospital is making good progress," said Gary Brown, communications director for the city Department of Behavioral Health and Mental Retardation Services.