Blue Shield of California and WellPoint’s Anthem Blue Cross will invest $80 million on a health information exchange (HIE) in California that would make the medical records of nine million beneficiaries—representing more than a quarter of the state's population— available to network physicians and hospitals.

As reported last week by the Wall Street Journal, the effort represents one of the largest in the nation at a time when exchanges have closed or consolidated for financial and administrative reasons.

The $80 million investment is intended to fund the first three years of California Integrated Data exchange, or Cal Index, which will be set up as a nonprofit, independent organization.  The insurers will each appoint a board member.

Since 2009, when the federal government made $550 million available to encourage the development of HIEs, hundreds of patient-data exchanges have been established by states, hospital systems and public-private hybrids. More than 300 are currently operating, but dozens more have closed due to funding and logistical problems, the Journal reports.

With government funding set to end this year, financial challenges are likely to grow. “We are really at a crossroads now,” Jennifer Covich Bordenick, chief executive of eHealth Initiative, a nonprofit that observes HIE activity, told the Journal. “It’s up to the private sector to step in and take over where the federal government left off.”

Such an exchange could theoretically improve quality and reduce costs by giving providers access to a patient’s care across the broader payor’s network, thereby providing a more complete picture of a patient’s health and reducing duplicative care.

The payors will contribute claims data to the exchange, including diagnoses, hospital and physician visits, procedures and lab tests. For the exchange to be useful clinically, however, hospitals and providers must contribute the more granular clinical data included in a patient’s EHR.

According to the Journal, the secretary of the California Health and Human Services Diana S. Dooley, said she is “willing to explore” the possibility of contributing information on the state’s Medicaid beneficiaries. Nonprofit Dignity Health was the first to commit to contributing data from its 32 hospitals in California. The UCLA Health System will conduct due diligence, but David T. Feinberg, president and chair of the Cal Index board, said he was certain that UCLA will participate and likely that the others will participate as well.

Individual patients will be able to block their information from being shared, the article notes, and user fees from providers and insurers will support the new exchange.