Differential privacy provides much better protection than data masking, but most importantly, it does not require any manual decision (which column to mask, how, etc.). This is what makes it easy to apply at scale to all datasets in the data warehouse or data lake instead of having dataset per dataset decision making involved.
Differential privacy is used by Apple, Google, Microsoft, or the US Census. When used properly, the data protection it provides does not need to be proven to regulators or security teams anymore. That being said, regulators do not require DP protection per se. They require organizations to put in place the best practices in terms of data governance, data minimization, or data security as a whole. This is part of the answer.
The system will generate a fake dataset with the exact same structure and schema (the information on patients is realistic, the images look reasonable and importantly has the right encoding, size, etc.). The purpose of this fake data is for the vendor to adjust their algorithm to be able to consume your data as it is. The vendor builds up the preprocessing on the fake data and then submit their data job to the API (say a preprocessing function to be applied on each record and a Tensorflow model to be fitted on the data, or just to measure the performance on the data). The preprocessing code runs on the original records, the model would be trained or validated against the real data. In the end they can prove the value of their model without having to get their hands on the real data.
I've not encountered differential privacy in my work before now, but at least for dealing with metadata in the DICOM it could probably be helpful for some datasets. But it could still be challenging to ensure the IODs are correct (or that known quirks are preserved). Anyway this is very interesting. I have a colleague who is working on some utilization/value research using billing records and I'll show him this.