Three years ago the English healthcare landscape appeared to be shiftingirreversibly.

The independent sector acquired a beach-head from which it could drive deep into the National Health Service as the government approved mould-breaking contracts for private surgical centres.

When bidders linked to South African, US and Canadian operators won virtually all the business, the UK's private hospital sector reacted with shock. Much of the NHS reacted withhorror.

There were heady predictions that within a few years the private sector could be providing up to 15 per cent of planned NHS operations.

The numbers covered by private medical insurance, and prepared to pay out of their own pocket, were projected to drop by up to 15 and 30 per cent respectively.

But there were also suggestions that the prices private hospitals charged would have to fall in the face ofthe overseas-backedcompetition.

In time, it was thought, that could feed through to lower insurance premiums, producing a "win-win" for both the public and private sectors: much shorter waiting times and more choice for NHS patients, but also lower prices for private ones.

In turn, that might revitalise a medical insurance market that had been little more than stagnant for 15 years.

So how much of that brave new world has come to pass? On the face of it, not a lot. Dig deeper, however, and there are signs thatthe revolution may have beenpostponed rather thanabandoned.

Not everyone is convinced that is the case. "There is a lot of political uncertainty about," says William Laing of the analysts Laing and Buisson. Parts of the private sector remain anxious that Tony Blair's departure may see the push for greater private sector involvement falter, or even cease.

Certainly some of the more excitable predictions have not been fulfilled. Subscribers to medical insurance have fallen, but marginally - down by 1.5 per cent at most since 2003.

The numbers paying out of their own pockets did dip more markedly in 2004 as the very longest NHS waits were eliminated. But that loss of revenue has been off-set by rapidly rising demand for cosmetic surgery.

And the private sector is nowhere near accounting for 15 per cent of NHS waiting list operations.

The first wave of treatment centres will treat only 170,000 patients a year, far from the original goal of 250,000. Meanwhile negotiations for a second wave have yet to be completed and look likely to treat significantly fewer than the additional 250,000 envisaged.

Even when fully operational, the two waves will account for only about 5 per cent of planned NHS operations - barely the level a health department study said was needed if the private sector market for NHS work was not to "stagnate and ultimately collapse".

Moves to inject private operators into areas with too few GPs have made little progress. But a much bigger advance has occurred in diagnostics - scans, x-rays, endoscopies - where contracts worth £1bn over five years are being finalised.

Cutting the wait for diagnostics is the key to the NHS next year hitting the target of reducing the average wait from GP to treatment to around eight or nine weeks.

And that reductioncould impose the real pressure on those who sell private medical insurance. Fergus Kee, head of membership for Bupa, says its research shows that "the vast majority" of subscribers will retain their cover.

But David Mobbs, chief executive of Nuffield Hospitals, says he still expects the numbers who pay out of their own pocket to fall.

From April next year, however, patients will be free to choose any hospital prepared to treat at NHS prices. The big providers are gearing up for that, convinced pleasant surroundings and low or zero rates of hospital-acquired infection will give them an edge.

Now that nearly 500,000 NHS patients have had the experience of private sector treatment, private providers say they expect word of mouth to help bring them business.

In addition, contracts are due to be awarded that could see the private sector play a big role in helping primary care trusts commission NHS care.

Some still worry that Britain's prime minister-in-waiting may stop all this when he reaches Number 10.

But Mike Parish, chief executive of Care UK, says: "There have been plenty of opportunities for Gordon Brown to obstruct what has been happening. So far that has not been the case. If anything, it has been the opposite." Asked if the changes are irreversible, Ken Anderson, former commercial director at the health department who negotiated the current contracts, says: "No. They could die of neglect. But I think to reverse them will take a much bigger act of political will than most people imagine."

Lower insurance premiums yet to materialise

Most of Britain's private hospitals have been investing heavily to change the way they operate in a bid to cut costs and compete for NHS patients.

But predictions that private patients would reap the benefit as health insurers lowered premiums have largely failed to materialise. The one clear example is a Standard Life healthcare policy that offers patients a 15 per cent discount if they forgo some choice over hospital and doctor. So far, says Mike Hall, the company's chief executive, it is accounting for about 10 to 15 per cent of its business.

Fergus Kee, managing director of Bupa membership, concedes that the industry "is still struggling to slow the rate of premium inflation".

That may change, however, if Bupa - which still has the lion's share of the insurance market - goes ahead with the proposed disposal of its hospital operations. If it acted solely as an insurer, Bupa would be able to seek tighter deals without damaging its own hospital business.

Dr David Costain, Axa-PPP's medical director, warns that "getting costs down without compromising quality is not easy".

But the insurers know they need to contain their prices. The sector remains bullish, however, that as the rate of increase in NHS spending slows, demand for private medical care will rise in the medium to long term.