Baxter wants England talks after Feyi-Waboso injury
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Baxter said it was "50-50" whether or not the injury required surgery and added it was a difficult first test case for the new agreement.
As part of England getting control of the country's best 25 players, the RFU agreed a deal to up their funding to the 10 Premiership clubs.
"He had two scans and an operation was decided upon initially 10 days post the injury, which would make him fit now," he added.
"I think that's the frustration - I think everyone can understand the various bits and pieces which led to some of the delays and that ended up being the rehab decision being the more sensible one.
"Ultimately now it doesn't look like the sensible one because the shoulder clearly needed an operation."
But Baxter said Feyi-Waboso still had a chance of being a "wildcard" to make the British and Irish Lions squad this summer.
The medical student burst onto the scene at the beginning of last season and opted to play for England rather than his native Wales.
He won his first cap in last year's Six Nations and has gone on to play eight times, scoring five tries including in each of England's two summer Tests in New Zealand.
"There often seems to be in a Lions year someone that comes in a little bit out of nowhere, they've either been injured or not quite broken through," said Baxter, who saw Jack Nowell make the 2017 Lions tour to New Zealand.
"He's going to be there or thereabouts with a shot of getting in there at some stage, but all we can do is work hard with him now.
"He'll be very focused on giving himself the best opportunity - bigger picture and longer term he's probably having the right treatment now that will look after him for a longer period of time rather than potentially leaving him with a grumbling shoulder that can last two or three years."