Laing & Buisson's 1998/99 Healthcare Market Review shows that the revenue of private hospitals and clinics may have expanded by as much as 10% in 1998.

This is a sharper increase than in 1997, when it rose by 6% to reach an estimated �1.42bn.

One of the main reasons for this is increased usage by people with medical insurance.

William Laing, author of the review, said: "To date at least, the Labour government does not seem to have dented demand for private healthcare.

"With the Labour government still struggling to control waiting lists, and with ever more visible rationing within the NHS, a significant and growing number of people continue to opt for private healthcare, paid for out of their own pockets if not by medical insurance."

He admitted that some hospitals had been badly affected by the decision to cut tax relief on medical insurance for the over 60s, but said the overall picture for private hospital care was good.

However, the economic downturn could have an impact on the market in 1999.

Private primary care

One of the most significant trends is the move by some private companies into primary care.

Currently 3% of GP consultations are privately paid, compared with 13% of hospital operations.

Norwich Union's Medicentre GP walk-in centres were the UK's first private venture into primary care.

But Laing & Buisson thinks PPP Healthcare's plans for a primary care service with NHS doctors - to be launched in the south and southeast in January - will be the most significant development.

PPP plans to set up initiatives where NHS doctors can also work in the private sector as long as they continue to "fully honour" their NHS contracts.

"The GPs involved are adamant they remain committed to the NHS," said spokesman John Dubois.

The private patients will be treated in different consulting rooms and will have "more flexible access" to their GP as well as guaranteed appointment times of 20 minutes, continuity of care, access to a 24-hour health information line and special arrangements for prescriptions.

The cost will be around �25 a month.

At the same time PPP Healthcare has just launched a partnership with Lloyds chemists to allow private patients access to prescription medicine at a competitive price.

It hopes the price can be kept down to �15 an item.

John Dubois says the new initiatives show the company's confidence in the market.

Private insurance

He agrees with Laing & Buisson's picture of the market.

"There has been more use of private cover," he said.

He added that this was partly due to an increase in the number of treatments on offer in the private sector.

A quarter of all heart surgery in the UK is now done privately, whereas private healthcare initially only treated ailments like varicose veins and hernias.

But BUPA, one of the UK's biggest private healthcare providers, says it has seen no big increase in demand in recent years.

The company's surplus for 1997 was down on that for 1996, but it is optimistic there is room for growth.

"It has to be put in the context of 1980s growth. There was a big upsurge, especially in the business market, which was hit by the recession of the early 1990s," stated spokesman David Bryant.

"You could say that we have managed to keep our market up despite difficult years," he added.

Corporate medical insurance accounts for 60% of the market.

The main stay on growth has been a virtually static market in private medical insurance.

The number of subscribers to BUPA medical insurance rose by only 1% in 1997.

One market which is having a hard time is the nursing and residential care home sector - the largest sector of the independent health and community care industry.