A distributed health data network is a system that allows secure remote analysis of separate data sets, each comprising a different medical organization's or health plan's records. Distributed health data networks are currently being planned that could cover millions of people, permitting studies of comparative clinical effectiveness, best practices, diffusion of medical technologies, and quality of care. These networks could also support assessment of medical product safety and other public health needs. Distributed network technologies allow data holders to control all uses of their data, which overcomes many practical obstacles related to confidentiality, regulation, and proprietary interests. Some of the challenges and potential methods of operation of a multipurpose, multi-institutional distributed health data network are described.