medical innovation zones …

A Medical Innovation Zone (MIZ) is a legislative concept modeled on Foreign Trade Zone (FTZ) and Free Trade Zone laws currently in force. Still, it only applies to healthcare-related research, development, education, and translational commercialization programs.  Healthcare consumes, in many cases, 10% of developed nations' Gross Domestic Product (GDP).  U.S. GDP in 2018 was $20.54 trillion.  Every man, woman, and child in the U.S. was expected to spend more than $12,000 each by the end of 2020, which is $3.96 trillion, based on a 2019 population of 330 million. The world population is seven billion.  That number has gone up substantially in the last four years.

So, How would A MIZ Work?

The Medical Innovation Zone (MIZ) concept is based loosely on the Foreign Trade Zone Act, which our nation has relied upon for decades to generate free and affordable trade in select areas.

The MIZ concept would require medical organizations, from academic medical centers to the smallest of community hospitals, to declare a niche area of research upon which they want to focus.  As a result, unlike the Foreign Trade Zone law, this declaration would give participants exclusive rights to commercialize research and reap the reward of that investment on behalf of the communities served.

The Act would generate more high-paying medical jobs in the communities that seek to use this concept. It would also cause a much higher rate of return for those same communities that embrace their initiatives and the private companies that choose to invest in them.

For Democrats, this concept would generate more, higher-paying jobs for those working at one of these participating medical innovation zone centers.  For Republicans, this concept would develop more significant revenue-generating partnerships that will choose to work in one of the zones.  For Independents, this concept would generate better educational opportunities for medical personnel and enhanced access to quality healthcare for all who seek its benefit.

This concept begins with putting more Americans in higher-paying jobs in a field that will always demand its services.  It will also serve as a role model for other commercial activities that can and will provide more significant benefits for all who use its features.

About Medical Innovation Zones

Medical Innovation Zones are designed to be global public-private partnerships anchored in the United States. They aim to catalyze and expedite commercially viable or publicly desirable medical advancements and bring them to market for use by others, regardless of their initial ability to pay.

As niche-declared market-exclusive geographic territories, Medical Innovation Zones are explicitly designed to foster measurable, evidence-based advancement in targeted areas of healthcare programs and facilities delivered.

As reported on occasion, healthcare consumes 12% of the Gross Domestic Product of developed nations.  The U.S. GDP is more than $20 trillion.

U.S. costs for every man, woman, and child are expected to exceed $18,000 each by 2032, which is $5.9 trillion, based on a population of 329.9 million people and a world population of 7.5 billion by 2028.

The MIZ Organization

The Medical Innovation Zone structure would be constructed under a public-private-philanthropic model consisting of an Umbrella, National Level, Zone Level, and Subzone Level structure.

The Umbrella Structure – a parent corporation would be established, the Medical Innovation Zone Partnership, Inc., which would be 60 percent owned by non-profit partners and 40 percent owned by for-profit partners.  Non-profit net revenue generated by the partnership would fund research, treatment pools, educational initiatives, job training, and more.  This structure would permit using Program Related Investment and Social Impact funding, allowing philanthropic and private equity investments by private family foundations, family offices, pensions, trusts, and more.  Philanthropic support for charity-benefiting initiatives, such as healthcare, education, job training, and others, would also be generated by this proposed structure.

National Level Structure – A 19-member oversight and management board would be created consisting of  Nine major healthcare partners, one each from 1) the Northeast, 2) Mid-Atlantic, 3) the South, 4) Midwest, 5) Plains States, 6) the Mountain States, 7) Southwest, 8) Pacific, and 9) Pacific Northwest.  The U.S. Department of Commerce, the U.S. Department of Health & Human Services, the U.S. Department of Labor, the U.S. International Trade Administration, the United States Senate, and the U.S. House of Representatives would provide six jurisdictional federal oversight partners.  An undersecretary from each government agency would serve on the management team as well as a member of each chamber of Congress as appointed by that respective body’s leadership.  The remaining four management board members would be at-large members elected by the membership above from the private sector who are neither healthcare providers (hospital or professional) nor government employees or representatives.

Zone Level Structure – This part of the MIZ structure would consist of exclusive market territories consistent with individual state boundaries, U.S. territories, and the District of Columbia.  Zone-level participants would coordinate and oversee the research innovation and commercialization efforts of the niche-declared market-exclusive territory and work directly with sub-zone members as appropriate.  Zone-level participants must include at least one healthcare provider, an academic medical center, a healthcare system, or a community hospital sponsor partnered with at least one corporate partner operating in the same geographic market.  Zone-level participants are encouraged to collaborate with foreign healthcare partners with expertise and interest in their declared niche market area.  There can only be one Zone Level participant per state, and it must be either an academic medical center, healthcare system, or community hospital.

Subzone Level Structure – The final component of the MIZ concept consists of participating healthcare professionals and providers who are not specific state zone sponsors and will help commercialize the intended innovation within the zone level territory and make it available to target markets who would like to benefit from the resulting innovation.

Economic Benefits

The economic benefits from MIZs would include no federal ad valorem taxes, duty-free purchasing, and available U.S. corporate income tax credits based on participation level.  States and their hosting counties will be encouraged to participate by providing tax-free periods on income taxes, business and corporate taxes, state and local taxes, sales and property taxes, zoning, and permits.

Other benefits might include expedited federal and state (if participating) regulatory issue resolution and filing approvals.

We also hope that any limitations of the Foreign Trade Zone law will be corrected or expanded while matching or surpassing these programs’ benefits.

The United States trade policy is based on a free trade model, and medical innovation transcends geographic and political boundaries by its very nature. We believe this concept will take that philosophy to the next level.

A Representative Case?

So, let’s illustrate how the Medical Innovation Zone concept might work in a currently fictional case:

An academic medical center in the mid-Atlantic states working with the XYZ Corporation, in this case, a winning Major League franchise, wants to focus its research and innovation priorities on sports medicine.

The academic medical center and sports franchise jointly apply for approval from the Medical Innovation Zone Partnership. After a 30-day review period, they are awarded a ten-year market-exclusive right to sports medicine innovation research and commercialization.

The niche declaration permits the academic medical center and sports franchise partners to be the only federally approved and tax-deferred or tax-credited partners in sports medicine innovation in the United States for the ten designated years.

The academic medical center and sports franchise partners then decide to subzone approve a group of community hospitals and smaller corporate businesses to participate in their approved sports medicine research and commercialization efforts.

The academic medical center and sports franchise partners also enter into a joint research and commercialization agreement with the governing league of a European professional sport.

The research and resulting commercial and education products that the partnership created through their innovations, in this case, effective medical protocols and equipment for torn hamstrings and their rehabilitation, are now being sold in the United States to other parties generating income tax credits and ad valorem tax-free sales to the academic medical center and sports franchise partnership, including their sales to Europe as well.

The income from the partnership has enabled the academic medical center and sports franchise partnership to fund considerably more sports medicine-related research and commercialization efforts, employ more than 1,000 new workers who have been expertly trained for these higher paying jobs, and is also able to provide free treatment for torn hamstring injuries for first responder groups in their home state, with the hope of expanding it to other states as soon as possible.

The benefit to the first responder groups has encouraged local police and fire pension funds to also invest in the research being conducted by the academic medical center and sports franchise partner, which itself encouraged three wealthy individuals and foundations to make principal naming gifts to the hospital to support further its research initiatives in cooperation with the sports franchise, which in turn, is advertising the protocol benefits at their games.

The home state, seeing the benefits of the federal program, has agreed to reduce property, sales, and income taxes on revenue directly related to the research and resulting commercial products.

As you can see, the Medical Innovation Zone concept could be pretty helpful to the United States as we work to climb out of our economic hole, especially when you consider that we are now managing a $34 trillion-plus national debt.