City officials say they were caught off guard by the sale of three Newark hospitals to an out-of-state company.

Columbus Hospital, St. James Hospital and St. Michael's Medical Center are being sold by Cathedral Health Care System to Pennsylvania-based Catholic Health East. Columbus Hospital will be closed by June 1 as a result, and massive layoffs are expected at St. James Hospital by March 15. At minimum, 1,200 employees will lose their jobs.

The only hospital to come out ahead due to the transaction is St. Michael's. Catholic Health East plans on spending $100 million on new equipment and improvements for the facility.

City officials say the transaction came as a surprise, especially after a council resolution opposing the closings was passed in 2007. The city was informed of the transaction Wednesday, and officials say they had been given false assurances the medical centers were not struggling.

"We have had scantly any communication whatsoever from the individuals involved in this," says Mayor Cory Booker. "In many ways, this was just sprung on us."

Cathedral Health Care, which had been losing $6 million per month, says unresolved Medicaid and charity bills were part of the company's financial problems. Employee Placido Lentin believes the company's money problems had another source.

"A lot of bad management had a lot to do with the condition of the three hospitals," says Lentin.