You're overstating the legal and regulatory risks. I work in health-care, which is probably one of the most regulated industries there is, and regulatory issues are not really a barrier to cloud services.
Okay, fair enough -- I will let this IT lawyer "overstate" them for me:
http://www.forbes.com/2010/04/12/cloud-computing-enterprise-...
> I work in health-care, which is probably one of the most regulated industries there is, and regulatory issues are not really a barrier to cloud services.
I recommend that you suspend judgment until someone wants to subpoena a case file, or internal memos and documents, for a high-profile malpractice lawsuit. It's much easier from the cloud than from an intranet or a file cabinet.
Most online medical records are encrypted for obvious reasons. But if a lawful subpoena comes down, the owner of the files is required to unencrypt and provide the requested materials, the existence of which is obvious from their online presence, even when encrypted. For local storage, a medical institution can say the files don't exist or are inaccessible. This option doesn't exist for online records.
The good news is that cloud storage speeds everything up and provides a measure of the degree to which patient data exists. That's also the bad news.
I'm not sure if that's a good example of why local is better than online, since by stating to the courts that something doesn't exist (when in actuality it does)is lying to the courts...I'm no lawyer, but I'd imagine that doing so is punishable. I think the benefits of online medical files far outweigh the offline component for many reasons.
Ok, now I know you're trolling.