Shady Grove Adventist Hospital officials told Montgomery County Council members yesterday that they are baffled by a national agency's move to revoke the Rockville hospital's accreditation, and that news reports have exaggerated the hospital's errors in patient care.

The hospital leaders told council members, sitting as the county's board of health, that Shady Grove has a "good story to tell" in its effort to undo last month's action by the Joint Commission on Accreditation of Healthcare Organizations.

If Shady Grove loses its accreditation, its continued participation in the Medicare program--a vital source of funding--could be threatened. The joint commission's investigation of patient care at Shady Grove disrupted the hospital's plans last month to issue millions of dollars worth of municipal bonds to raise capital for future projects.

The hospital's interim president, Terry White, told council members that joint commission surveyors performed only a cursory review in October before changing their top-ranked accreditation to preliminary nonaccreditation, the council's second-lowest rating.

White said the hospital will appeal that decision next week in Chicago.

While acknowledging that the 263-bed hospital has had deficiencies--including surgery on a patient's wrong hip and the death of an intensive-care patient who was left unattended in a hallway--White said Maryland health officials investigating the hospital didn't find much.

Only 30 of the 100 complaints made to state hospital inspectors related to poor patient care, White said, adding that "of these, 15 had some validity."

But that runs counter to what state officials have been saying: that more than 75 percent of the 100 complaints they received dealt with patient care problems. Hospital inspectors said they decided to investigate only the 30 incidents that were recent, verifiable and serious.

"A lot of the complaints had to do with poor nursing care, but they lacked specifics," said Carol Benner, chief of Maryland's office of health care quality. "It was impossible to investigate them."

White and Benner say the hospital has submitted a plan of correction that could lead to improvements. Among other things, the hospital's parent company, Adventist HealthCare Inc., has created a committee of its governing board that will be devoted to supervising quality of care.

Montgomery County Council member Nancy Dacek (R-Upcounty) expressed sympathy for the problems facing Shady Grove's administrators and wondered what had happened to derail the hospital.

"I presume we'll never know fully," said Adventist HealthCare's interim chief executive, Ronald Wisbey. "There were processes that were flawed. . . . Human errors will occur."

Dacek criticized Adventist HealthCare for agreeing to 1997 severance pay worth $4.7 million to Bryan Breckenridge, then the chief executive officer, and $3.1 million to Edmund R. Peters, who was chief financial officer.

"I'm anxious to keep you in business," Dacek said. "Your former head officials left with very nice severance packages. That isn't something that reassures us."

Wisbey told Dacek he has gotten that message loud and clear from the community. "I'm not here to defend that," he said.

White said that despite laying off or reassigning 79 employees this year at Shady Grove and its sister hospital, Washington Adventist Hospital in Takoma Park, neither is understaffed. However, he said the regulators' actions have intensified pressures on nurses.

"Family members and patients have been questioning their every move," he said.

CAPTION: Ronald Wisbey, interim chief executive of Adventist HealthCare, talks with the media after testifying before County Council members sitting as Montgomery's health board.