One of the people I know works in really sensitive healthcare and I asked them the same thing out of curiosity. Now aside from the first doubt of any thing could be removed because of as you say nearby hosted Chinese model.

The reasons are:

1. A less valid reason but (iirc) its their clients who believe that American models are safer in that context. Fighting their client about that demand is really hard given the really sensitive work that they deal with.

2. Their system actually makes it so from my understanding that even the employes couldn't access the private data itself or have some really hard lockdowns. They use some sort of service provided by Azure for that with GPT models.

IMO, the thing that they were worried about were more the deprecation of previous models and they reluctantly have to switch models and the models censorship which is a real pressing concern for them

The previous gpt model that they were on (I think 4o/5 I am not sure) was more willing to answer their questions. The recent models are more like "let me stop you just right there" and other censorship.

With models switching and being forced to change to models which aren't as effective for use cases, a point comes where they might change from it altogether into open-weights model hosted on nearby servers, but I think that they are waiting to see how things pan out really