The Arizona Health Innovation Trust Fund (AHIT) was created by statute in 2022 and established under the Arizona State Treasurer’s Office (ASTO) with the State Treasurer as trustee. In 2023, Arizona’s elected leaders have the opportunity to capitalize AHIT as part of the FY2024 budget process. This investment in Arizona’s future continues the process that the Senate, House, and Governor began in 2022.
The purpose of the Arizona Health Innovation Trust Fund is to help more small, Arizona-based, bioscience companies grow in our great state and to provide more training programs to support the growing workforce needs. With this support, health innovators will create high quality jobs, drive economic growth, and, most importantly, support the development of Arizona discoveries that can become life-enhancing treatments and possibly life-saving cures.
This all starts with capitalization of the Arizona Health Innovation Trust Fund.
Arizona’s health innovation sector is the beneficiary of over $25 billion in public and private investments in its discovery and healthcare delivery infrastructure over the last 20 years. The result is over $38 billion in economic impact in the year 2021 alone.
However, the process of creating health innovations has three parts: discovery, development, and delivery. This middle component, development, is the bridge that discoveries originating at our universities, hospitals, and small businesses must cross before they can create a benefit for the people who need them. Arizona’s development infrastructure also must be supported. That is what AHIT is designed to do.
Arizona leaders have set a goal to make Arizona home to a top-ten life science sector. The impact of reaching top-ten status will be significant. In 2021, the #10 state had an economic impact of over $78 billion.
When AHIT was created, the goal for the corpus of the trust was $200 million. Funding for the trust can come from public sources including, but not limited to, state or federal funds as well as donations from private individuals and organizations. Arizona’s AHIT investments are managed by ASTO. After the funds have matured for 5 years, ASTO will make distributions of 4% annually to an Arizona 501c3 public charity to fulfill the statutory requirements of this public-private partnership:
- provides entrepreneurial education, mentoring and support to persons in the health innovation and health care delivery sectors;
- provides programs that support workforce development;
- provides programs that support the development and commercialization of health innovation;
- has entered into an endowment agreement with the Treasurer that includes investment procedures, maturity timelines, other requirements established by the Treasurer and entity reporting requirements.
The non-profit entity must annually submit a report, as prescribed by the Treasurer, to the Governor, the President of the Senate, the Speaker of the House of Representatives, and the Treasurer by each December 31.
In December 2022, the Opportunity Through Entrepreneurship Foundation (OTEF) entered into a contract with ASTO to be the non-profit that will received the annual distributions and deliver these services as AZAdvances programs.
The current estimate of the funds needed to bridge Arizona’s health innovation development gap is $10 million per year. As the sector grows, the need will grow. Under AHIT’s endowment model, the core investment capital will grow to meet this need. The table below illustrates what a 4% distribution from the trust would be as the core capital of the trust grows.
As an endowment model, similar to the trusts established under ASTO that are managed for Arizona’s cities and towns, investment returns on the core capital continue to grow and replenish the trust.
Capitalizing the Arizona Health Innovation Trust Fund is an investment in Arizona’s future that will yield returns on an ongoing basis. It will yield benefits to Arizona today and for generations to come delivering both economic and health impact.
To learn more about the Arizona Health Innovation Trust Fund, contact us.