To save money, Clalit Health Services - the country's largest health fund - is increasingly supplying services to members at its own community facilities and medical centers, rather than in government hospitals. This trend is a main factor in higher deficits in the state-owned hospitals. This is one of the conclusions of a report by the Health Ministry's accountant's office released for publication on Wednesday. All the government hospitals except two reported operating deficits in 2007. The total deficit reached NIS 404 million in 2007 compared to NIS 368m. in 2006. The only state-owned hospital to make a profit was Sheba Medical Center at Tel Hashomer, while Tel Aviv Sourasky Medical Center (Ichilov) broke even. Government funding of state general hospitals declined to 3 percent of their income (NIS 194m.) in 2007, compared to 3.5% (NIS 214m.) the previous year. As a result, state-owned hospitals increasingly fund their development and infrastructure with outside donations (which will become more difficult in the current financial situation in Israel and abroad). Prepared and written by ministry accountant David Gershonovich and colleagues, the report notes that the government's 11 general hospitals comprised 46.5% of the general hospital beds in the country in 2007, with activity totalling NIS 6.7 billion that year (a rise of 5% compared to 2006). In the seventh such annual report, the ministry accountant said Clalit purchases 55% of all medical services from medical centers. Many of the hospitals have global agreements with the four health funds, including Clalit, and have to give the insurers discounts under "capping" and other agreements. These yielded NIS 557m. in savings for the health funds, at the expense of the general hospitals, compared to NIS 193m. in 2000. However, the share of discounts from global agreements, compared to hospital incomes, remained steady at 9.9%. The report also notes that a new model that fines hospital departments that have higher rates of medical negligence will continue. The model was launched by the Inbal insurance company and is supervised by ministry director-general Prof. Avi Yisraeli.