David Ross will be 70 later this year, and he can't believe that his sight is still so clear. As one of the first patients in the country to be decanted into a private clinic for his cataract operation - on the NHS - he avoided a year of living in near-blindness. Without knowing it, Ross was part of an experiment to change the health service from the inside, almost by stealth.

'I'd been on the waiting list for my cataracts for a while, and they told me it could be another 12 to 18 months,' recalled the pensioner, from his home in Staverton, Northants. 'The consultants at the local hospital were run off their feet.

'Then the doctor offered me the chance to go to the private clinic in Daventry and it was fantastic. The next morning when I woke up after the operation, the sky was so blue - it looked as if it had just been painted.'

The operations on both his eyes took place within weeks of each other in December 2003. Ross was one of the first patients to go to an Independent Sector Treatment Centre (ISTC), a clinic run by a private company specifically to help clear the long waiting lists for common operations.

There are now eight of these 'waiting list factories' which have treated many thousands of patients, and 16 more are due to open across Britain in the next two years.

They represent a massive change in how people receive their care, but many doctors and managers hate them because by taking patients - and money - away, they jeop ardise the future of their own NHS units.

The new Health Secretary, Patricia Hewitt, has revealed that she plans to make unannounced visits to hospitals around the country, so that she can talk to staff informally about their work. 'The next thing I will do - if someone will let me - is just put on a set of scrubs and shadow somebody and really melt into the background,' she confessed to the Health Service Journal .

But she already has some firm ideas of where the NHS has to go. Last week saw her deliver her first major speech to the health service. She began with soothing words about listening to staff fears, but was quick to point out that quite apart from the money already earmarked for the next three years, 'a potential pot of gold is in your hands.' She told the NHS Confederation delegates: 'Frankly, if your hospital trust or PCT (primary care trust) is facing significant financial difficulties - and several of you are - despite having more money than ever before, then system reform isn't an optional extra or another bureaucratic demand, it's your highest priority.

'If a shorter stay in hospital gives the patients as good - or better - outcomes, let's do it,' Hewitt said. 'If doing the x-ray or blood test or the minor operation in the local health centre gives the patients as good - or better outcomes, and costs less, let's do it.'

The reforms that have been ushered in over the past three years, have left staff feeling confused and over-managed. There is great uncertainty among nurses and consultants about the direction in which the NHS is heading. Senior managers say that doctors are particularly 'disengaged' because the changes have been tied up in managerial jargon and not explained to them.

But what perturbs both Hewitt and the Prime Minister, who decided five years ago to give the NHS such an enormous pot of gold, is why the NHS is not more productive, given the amounts it has enjoyed. Spending has doubled in the past eight years, and will reach £90 billion by 2008, bringing us up to levels of investment enjoyed by the rest of Europe.

So where is the money going? There have been enormous cost pressures, in particular the increase in pay to staff, the increases in the pension contributions from the NHS, and payments for clinical negligence.

This disparity between the sums going into the machine, and the lack of transformation is felt keenly by hospital chief executives. A survey produced last week showed tellingly that one-third of them felt that the gains that had been made in the health service did not match the level of investment. Even more alarmingly, the poll revealed that nearly two thirds of the 80 chief executives questioned didn't believe that all the targets could be met over the next three years with the current funding.

But the uncertainty over where the reforms are headed is not seen by everyone as wholly negative. Mark Britnell, the formidable chief executive of the University Hospitals Birmingham trust, one of the biggest NHS trusts in the country, said: 'There might be a lot of NHS administrators who want more certainty than life in the 21st century can afford. That said, I think it's important that the reforms are explained to people from the patient's point of view in language that isn't about markets.'

What senior managers don't want is the invention of any new reforms until they have been given a chance to sort out existing ones. Nigel Edwards, of the NHS Confederation said: 'There's enough policy around to help change things for the better. The problem is that they keep inventing new policies to solve details they hadn't thought through last time.'

There are three main elements of the changes which the government hopes will transform our care. These are patient choice through the use of private companies, the introduction of a new financial system known as Payment by Results and better commissioning of services by primary care trusts.

The payments system will mean that fixed tariffs are set for specific operations. Some hospitals will emerge as more expensive than others, and they are the ones that are worried about the future. There are several hospitals which already have big deficits, and the biggest concern is that if they lose more patients like David Ross to the private centres, then it will be hard to sustain their emergency and specialist services, because it is the routine operations that make them money.

The really big revolution would be for the NHS to do far more work outside hospitals and in GP surgeries or even at home - as they are now doing in Japan and Canada. As Gill Morgan, head of the NHS Confederation, explained: 'Choice is not yet systematically built into the NHS.

An orthopaedic surgeon may prefer to operate on a patient whereas actually receiving intensive physio could be just as successful. We've got to get beyond the doors of hospitals into the places where more care is provided - in homes and in GP surgeries. That's the real challenge for us now.'