Tenet Healthcare Corporation, a privately owned health care services company based in Dallas, Texas, has officially ended all efforts to buy five hospitals in Connecticut, concluding over two years of negotiations.

Tenet notified state regulators it was withdrawing its applications to buy the hospitals in December. This decision arrived 10 days after the state Office of Health Care Access set multiple controls over staffing, services and pricing as conditions for approving the sale of Waterbury Hospital, the first of the five hospitals under negotiation, which also include St. Mary’s in Waterbury, Bristol Hospital, Manchester Memorial and Rockville General Hospital. As the purchase of Waterbury Hospital was expected to be the model for the remaining four institutions, Tenet decided to opt out of the entire purchase.

Despite efforts to salvage the deal over the course of two months, Tenet and Gov. Dannel Malloy announced last week that parties on all sides of the deal were ultimately unable to reach a compromise.

“We believe it is best for the hospitals, their employees and the communities they serve to move forward exploring other options,” Tenet said in a press release distributed last Wednesday.

In a statement in December, Tenet said that OHCA’s 47 proposed conditions led the company to believe Connecticut’s approach to regulatory oversight would not enable them to operate the hospitals successfully.

In particular, Tenet said that a proposed five-year ban on reductions in staffing or reductions of services would have prevented Tenet from efficiently running the hospital.

Patty Charvat, the Waterbury Hospital director of public affairs, said the OHCA conditions essentially mirrored regulations that had been rejected by all parties earlier in the discussion.

“It was a clear message that the obstacles we thought we’d already surmounted were going to continue,” she said in an interview with the News.

After Tenet withdrew its application, on Jan. 29, State Senate Minority Leader Len Fasano ’81 and State Senate Martin Looney, D-New Haven, met with Trip Pilgrim, senior vice president of development at Tenet, in hopes of salvaging the deal. In addition, a group of 40 Connecticut legislators signed a letter to Malloy requesting that he intervene in favor of the sale. In response, Malloy held a series of discussions with Trevor Fetter, CEO of Tenet.

However, the areas of disagreement proved too difficult to bridge, and the deal was eventually abandoned.

Fasano has publicly blamed Malloy for Tenet’s withdrawal, accusing him and his office of being behind the OHCA regulations that led to Tenet opting out of the purchase. But Malloy’s office disagreed.

“Senator Fasano seems more interested in finger pointing than putting forward serious ideas,” Malloy spokesman Mark Bergman told the News.

The deal’s failure delivers a severe financial blow to Waterbury Hospital, which projects annual losses of $10 million beginning next year and needs at least $50 million in capital improvements, yet has no ready access to capital markets, according to the office of Connecticut Attorney General George Jepsen.

Last month, the hospital announced it will reduce its workforce by 80 full-time employees as part of a four-part strategy to rework its financial plan.

In an official statement, Waterbury Hospital CEO and President Darlene Stromstad cited challenges from state and federal reimbursement cutbacks, the impact of healthcare reform, a changing marketplace and healthcare services shifting to outpatient settings as reasons for the hospital’s financial decline.

Charvat believes that the failed deal will likely scare off other healthcare service providers from Connecticut.

“It’s a tremendous lost opportunity for the entire state to be a leader in health care innovation,” she said.

Tenet Healthcare Corporation currently owns and operates 80 acute-care hospitals in 14 states.