The development comes shortly after Yale New Haven asked for $80 million in state government support for the transaction to take place.
The talks breakdown could expedite a decision by the state on certificate of need requirements for the transaction to occur, the report said.
Yale New Haven is also seeking to reduce the original $435 million purchase price because of deteriorating conditions at the three hospitals owned by Los Angeles-based Prospect Medical Holdings.
No information was available on when the CON decision will be determined, the report said.
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