A unique aspect of the healthcare delivery is its inseverable ties to local settings and physical infrastructure. Health systems’ services are limited to the regional markets they serve, and even the largest systems only expand into new markets at great expense. No other healthcare subsector faces such constraints, a dynamic which has become especially relevant thanks to the disruptive competition brought on by vertical integration. Some of the largest companies in the world are competing with health systems to serve the same patients and employ the same physicians. To illustrate: UnitedHealth Group (UHG) increased its revenue by $124B in three years; Kaiser Permanente, the largest health system, has a total revenue of $128B. It took UHG only three years to grow a Kaiser Permanente-sized business within itself.
 
Organizational scale determines financing and access to capital, allowing large companies to place bigger bets and absorb worse losses in pursuit of innovation. This is especially relevant in the race to deploy AI. To compete, health systems need to capitalize on their local presence and relationships with patients and their communities, which is hard for an Amazon, UHG, or Walmart to replicate. These relationships can then be supported by technology partnerships to enhance the sophistication of health systems’ care delivery “product,” effectively leveling the playing field.