Adventist had begun to peddle the center after attempts to move the facility out of town were abandoned in mid-2005.
DSI Holding Co. Inc. in Tennessee, headed by Dr. Jerry Tannenbaum, was the only known suitor.
As of Monday, negotiations were still under way and progress was being made, DSI Executive Vice President Steve Harrison said, just hours before the Adventist board determined the terms of the sale were not advantageous.
Tannenbaum did not return calls seeking comment. City officials were quick to praise the news.
"We look forward to working with Adventist Health to keep existing medical services and to expand them to further meet community needs," said Assistant City Manager John Pietig.
Pietig and Councilwomen Kinsman and Jane Egly served on a joint city/hospital task force created to ensure the hospital stayed in town.
"I am very proud of our city staff, particularly John Pieti, and Cheryl, who have really pursued this issue," Egly said. "And the good news is that Adventist is staying. We are all thrilled."
Adventist, which bought the medical center in the late 1990s, put it on the market last summer. Hospital administrator Gary Irish said then that the cost of seismic retrofitting the facility, at an estimated $70 million, and the need to attract more patients had prompted the decision to sell after an attempt to relocate was abandoned.
Irish said any deal would probably hinge on Adventist recouping its long-term debt of about $15 million and another $13 million spent on operations.
The hospital's operating budget is about $72 million a year.
"We hope to have a new owner by January of '06," Irish said last July.
City officials said a new owner was preferable to losing the hospital altogether, but not knowing much about the buyer has been unsettling.
A year later, a deal was still pending, and Adventist did a 180.
