Officials launch nonprofit to oversee new medical school’s innovation zone

Posted March 10th, 2016

Community leaders today are announcing the formation of a nonprofit organization that will develop and oversee an innovation district anchored by the Dell Medical School.

The nonprofit, called Capital City Innovation Inc., will help bridge Austin’s entrepreneurial community with the health care research and development emerging from the medical school and teaching hospital, officials said of the initiative announced as South by Southwest Interactive began. 

“The branding has become ‘rethink everything,’” said state Sen. Kirk Watson, D-Austin. “Well, part of what I see the innovation zone doing is … we get to rethink the future. We get to rethink innovation.” 

Austin couldn’t have created this zone without the new medical school, teaching hospital and the 14 acres of downtown real estate held by Central Health, Watson said. Those entities, including Central Health, the Seton Healthcare Family and the University of Texas medical school, will provide the initial funding for Capital City Innovation, officials said. 

Each of those will hold one seat on the nonprofit’s board, which was designed to include mostly public-sector representatives. Mayor Steve Adler and Travis County Judge Sarah Eckhardt will serve as advisory members, and four other slots will be held by community representatives. 

The public-sector leadership reflects the district’s founding institutions and the project’s commitment to the community, Watson said, but it will have a lot of private-sector input. 

“Let’s get this locomotive started, and then we’ll figure out what next steps are,” he said, noting that details about staff and funding will be hammered out in the coming weeks and months. 

Officials said they envision the district becoming the primary mechanism for disseminating the medical school’s economic and health care benefits. Seton and Central Health will serve as a primary conduit on the medical side, for example, taking new models and ideas and integrating them into their care. 

“Think about all the different venues where we collaborate with partners, service providers and other community partners that would benefit from these activities,” said Patricia Young Brown, CEO of Central Health. “We always played a connector, convener role, and I’d see us extending that into this space.” 

While the district’s core will surround Central Health’s downtown property, she said organizers envision multiple zones. They could include Austin Community College facilities, as well as clinics or other entities throughout the region, officials said. 

With multiple locations, Young Brown said, “they’re probably a little more embedded in the community. … You have the potential to bring different constituencies into the conversation.” 

On the industry-development side, the benefits might be a little less defined. Innovation districts have had a mixed record of success in building centers of commercialization and startup activity, according to national urban development experts. 

Kendall Square in Boston gets a lot of attention for its success. But outside Boston, San Francisco and San Diego, many similar efforts in other regions haven’t generated a major increase in funding, startup or commercialization activity. 

To some extent, it’s a matter of expectations, said Joe Cortright, economist and head of City Observatory, which studies urban and economic development. If the objective is to create a big medical research institution and bring in grants, create highly paid jobs and provide some medical care, that’s a reasonable goal, he said. 

“But if you have the expectation that’s somehow going to lead to commercial activity, especially in the biopharmaceutical space where the big bucks are, that doesn’t tend to happen outside those established places,” Cortright said. 

He pointed to the track records at some of the country’s top medical hot spots, including Johns Hopkins University in Baltimore and UT’s MD Anderson Cancer Center in Houston. Both bring in huge amounts of federal and grant funding, but their rates of commercialization, venture capital investments and spinoff activity can’t match the trio of top life-science centers. 

Local officials said they don’t expect Capital City Innovation to challenge those hubs, especially in industries they already dominate. But they don’t shy away from bold terms when discussing the region’s potential role in emerging health-related industries. 

“We think traditional biotech and pharmaceuticals, there are opportunities there to enhance that, and we want to help,” said Clay Johnston, dean of the medical school. “But we also think that Austin is uniquely situated, especially with the medical school and how we’re approaching our mission, to make advances in the whole digital health arena, so where technology meets health.” 

Johnston cited medical devices, health care apps and consumer products, such as Fitbit, as a few examples of how Austin can merge its traditional strengths in information technology, software and semiconductors with health care. 

In those fields, he said, Capital City Innovation could create a new “center of gravity” for digital health products and services — especially technologies geared for the emerging models of health care delivery that the school hopes to pioneer. 

“We have big and small companies here, a history of tech and a system designed to develop forward-thinking technologies and deliver health to populations,” he said. “That’s not the case in San Francisco and Boston, and that gives us an opportunity to do something unique in an area where it’s feasible for us to compete.” 

The target shouldn’t be on the top tech hubs, said Scott Andes, a senior policy analyst at the Brookings Institution, where he studies innovation and place-making. The best innovation districts take what an area does well already, and amplifies that in one place. Successful medical-related districts create a space with amenities that draw people, encourage entrepreneurial activity and forge connections with the surrounding community, Andes said. 

Further, he and other experts said, the biggest impacts on regional economies usually extend from the connections built between participants in the innovation district and existing local companies and residents. 

“It’s less about envy for Silicon Valley and more about how we can build wealth locally,” said Christina Gabriel, president of the University Energy Partnership, an energy-technology research collaboration among several mid-Atlantic universities. 

Efforts to bring locally owned businesses into the supply chain can build wealth across the community, Gabriel said. And developing educational and training programs now could help Austin’s current low-skill workers move into new jobs — many in coveted middle-wage occupations. 

Even without specific ties to the community, an innovation district could generate plenty of research, startups and investments, said Brian Kelsey, founder of Civic Analytics. But that probably would occur anyway, without the additional incentives and public investment in a district. 

“If this really is about inclusive development, then you must be able to show how the innovation zone is achieving measurable outcomes on inclusion,” Kelsey said. “Otherwise, this is nothing more than a real estate play.”

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