SHIELD: A Diverse Clinical Note Dataset and Distilled Small Language Models for Enterprise-Scale De-identification
De-identification of clinical text remains essential for secondary use of electronic health records (EHRs), yet public benchmarks such as i2b2 2006/2014 are over a decade old and lack the semantic and demographic diversity of modern narratives. While Large Language Models (LLMs) achieve state-of-the-art zero-shot extraction, enterprise deployment is hindered by compute costs and governance restricting Protected Health Information (PHI) from cloud APIs. We introduce SHIELD (Synthetic Human-annotated Identifier-replaced Entries for Learning and De-identification), a diverse dataset of 1,394 notes with 10,505 gold-standard PHI spans across 9 categories, built via set-cover diversity sampling with human-in-the-loop adjudication. We evaluate four LLMs (two proprietary, two open-weight) to establish a performance ceiling, then distill these capabilities into locally deployable Small Language Models (SLMs). Distributional analysis using Frechet Text Distance and Jensen-Shannon Divergence confirms SHIELD occupies a distinct region of biomedical embedding and vocabulary space versus legacy benchmarks. Our best distilled model matches its teacher on structured PHI categories (DATE, DOCTOR, ID, PATIENT, PHONE) and achieves micro-averaged span-level precision of 0.88 and recall of 0.86 on standard workstation hardware. Cross-dataset evaluation shows diversity-trained models generalize well on universal structured PHI, while institution-specific entities remain hard to transfer, suggesting optimal deployment combines broad-coverage models with specialized models for high-volume notes. We publicly release the SHIELD dataset and the distilled DeBERTa v3 model.