The company commissioned Amey to carry out a feasibility study at the junction on the A6091 which had an ongoing record for accidents and motorists expressing difficulties.
Transport Scotland has now confirmed its preferred approach would be to install traffic signals at the junction and reduce the speed limit on the A6091.
Work is continuing on investigations whether the signals will operate successfully and whether the changes can be accommodated.
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A consultation on the preferred design will begin with stakeholders in February. A final agreement will then be created on the confirmed layout, with changes to be made by the end of March. If agreed, works would likely be carried out during this year. NHS Borders will also carry out improvements to the hospital entrance to support the works.
Council Leader David Parker said: "I am delighted that Transport Scotland has carried out such a comprehensive feasibility study looking at all available options to address concerns at the junction.
"From the draft layouts I have seen, if all the investigations reach a positive conclusion a very significant scheme will be put in place that will hopefully prevent the accidents and many near misses that take place.
"Although traffic signals are the preferred option, other solutions, such as a roundabout, were carefully considered but have all been deemed unworkable for very sound reasons. The scheme which is being developed would be a major investment in accident prevention."
(LM/MH)
