LOS ANGELES (CBSLA.com) — Prime Healthcare Services Inc. backed out of its proposed $840 million purchase of six Daughters of Charity Health System hospitals, just weeks after state Attorney General Kamala Harris approved the much-debated deal.

Dr. Premm Reddy, founder and chairman of Prime Healthcare, said the conditions imposed on the sale by Harris “are so burdensome and restrictive that it would be impossible for Prime Healthcare — or any buyer — to make the changes needed to operate and save these hospitals.”

The proposed sale had been the subject of multiple public hearings, in which opponents claimed Prime would cut services at the nonprofit hospitals to boost the bottom line, while proponents said the hospitals faced possible closure if the deal was not approved.

Elizabeth Nikels, vice president of marketing and communications for Daughters of Charity, said Prime’s decision was disappointing.

“We strongly disagree with Prime’s position on the attorney general conditions,” Nikels said. “We are confident that Prime could successfully turn around the DCHS hospitals. We remain committed to finding the best solution for our patients, communities we serve, physicians, employees, retirees and creditors.

“We recognize that time is of the essence as we navigate these challenging financial obstacles. Over the coming days, we have difficult decisions to make and we will communicate those decisions after we have a chance to consult with our advisors, boards of directors and the Daughters of Charity,” she said.

Two of the hospitals that were to be sold in the deal are in Southern California – St. Francis Medical Center in Lynwood and St. Vincent Medical Center near downtown Los Angeles.

Assemblyman Anthony Rendon, D-Lakewood, said he is confident there is another “viable buyer that will carry out DCHS’s mission of serving the poor and working on behalf of the community.”

When Harris approved the sale, she included a dozen conditions, including a requirement that for-profit Prime invest $150 million for capital improvements at the hospitals over the next three years, and mandating maintenance of the hospitals and emergency services for 10 years.

“Prime is choosing to walk away from this transaction after publicly stating that it had no issue with the ten-year conditions and intended not to close any of the hospitals or end essential services. By walking away, Prime is confirming many of the concerns heard at multiple community meetings that the continuity of vital healthcare services in these communities is not its priority,” Harris said in a statement.

Robert Issai, chief executive of the Daughters of Charity, had warned previously that the network was losing more than $10 million per month and would file for bankruptcy if the sale was not approved.

Reddy said Prime’s purchase offer was the best on the table, including a commitment to keep all of the hospitals open for at least five years, maintain all charity care and fully fund pensions of 17,000 current and former employees.

“It was with a heavy heart that we came to this decision, as we had sincerely hoped for DCHS to become part of the Prime Healthcare family and did everything possible to try to make that happen,” he said. “We have great respect for the mission of the Daughters of Charity and wish the best for the communities we had hoped to serve.”

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