Is it appropriate for a supervisor to talk about a past employees mental health

I had this coworker who was here a few months and we never saw him last month. One of my coworkers was saying she saw him in at our lunch break yesterday at Ollie's and my supervisor said "Yep. He went a psyche ward. Oop." And covered her mouth but clearly in a way were she obviously didn't slip up. She meant to say that. She laughed and said he's not our employee anymore so who cares. Is it really appreciate to say how a past employee ended up in a mental health hospital? Especially when it's a small town and people talk?