I think it should be close to East Central myself. One of the points of this medical school and research hospital is to better serve the community especially the low income areas. To enhance community health services and options for the poor. Higland would be a reasonable option for that as well but it wouldnt be easily accessible from all parts of Austin. Your forgetting everybody south of the river and it wont be easy for people down here to get to a Highland location due to the bottlenecking through Downtown. A Medical District parallel to the East of Downtown would be best. Also there are no hospitals east of I-35 in Austin other than the Children's Hospital. I think that needs to change.
Although having it on the Brackenridge Tract would be more picturesque with the hills and the river.