She confirmed the project cancellation after further questions from Hawke's Bay Today.
"Medical rooms are an expensive build and the numbers didn't work," she said.
"One of the critical aspects of the integration was the financial implications for both organisations.
"After careful consideration and a significant amount of work, we have agreed that the financial implications do not work for either organisation in the current health economic environment.
"We will continue to work together as part of the Hawke's Bay health sector to improve the health of our enrolled populations."
Health Board chief executive Dr Kevin Snee said similar developments have been tried many times, both nationally and internationally, "and often don't happen because of the complexity involved, despite the best intentions of everyone".
He said it wasn't a wasted exercise.
"I am optimistic the learnings and knowledge gained can be applied to other initiatives such as a health and social care network concept the district health board is working on," he said.
"These networks will bring all sorts of health and social care organisations together to form a kind of community health hub for different communities in Hawke's Bay."
Hastings Health Centre chief executive Hayley Anderson has resigned and an interim chief executive appointed in her place. Ms Anderson's replacement will be former Hawke's Bay District Health Board general manager of planning and performance Andrew Lesperance, currently working in the South Island.
Ms Foster said no decision had been made on what to do with the King St site.