New Haven’s two hospitals may soon become one.

Yale-New Haven Hospital and the Hospital of St. Raphael have signed a letter of intent to merge into two-campus hospital, according to a press release sent this morning by both hospitals. The merger will bring financial stability and better coordinated care to both hospitals, the press release said.

“The proposed integration is in the best interest of this community, our patients and our two organizations,” said St. Raphael’s president and CEO Christopher O’Connor.

Under the proposed merger, Yale-New Haven would purchase St. Raphael’s assets and invest $135 million in capital improvements to St. Raphael’s campus. The combined hospital would have 1,477 beds.

“With the prospects of significant healthcare changes on the horizon, hospitals across the nation are exploring innovative ways to enhance access to high quality care while driving down costs,” said Marna Borgstrom, president and CEO of Yale-New Haven Hospital in the press release.

It is not yet clear how the merger would affect approximately 11,000 employees at both hospitals. The release said the “majority” of St. Raphael’s would keep their jobs and receive benefits matching those of current Yale-New Haven employees.

The letter of intent, the first formal step in the regulatory approval process, allows the two hospitals to examine integration in greater detail. Signing a definitive agreement will initiate a regulatory review of the merger by state and federal agencies.