Island supporter seen around a hospital in the city (7)
I believe the answer is:
isfahan
'city' is the definition.
(I've seen this before)
'island supporter seen around a hospital in' is the wordplay.
'island' becomes 'is' (abbreviation).
'supporter' becomes 'fan' (fan is a kind of supporter).
'seen around' shows that the letters should be reversed in order.
'hospital' becomes 'H' (abbreviation for hospital).
'in' is an insertion indicator.
'a'+'h'='ah'
'ah' reversed gives 'ha'.
'fan' enclosing 'ha' is 'fahan'.
'is'+'fahan'='ISFAHAN'
'the' acts as a link.
(Another definition for isfahan that I've seen is " Iranian city".)