When the islands are gone the traffic lanes will be moved sideways towards the hospital side of the road.
In stage two, the new signal and street light structures will be installed, which will involve laying new ducts, kerb and channels, driveways and footpaths.
The traffic lanes will then be shifted to the north side for stage three, with new signal and street light structures installed on this side.
This will also involve new ducts, kerbs and channels, bus bay and footpaths.
Finally, the existing road would be repaired and the new asphalt surface laid with the new traffic layout to be road marked.
"These improvements will make it safer and easier for everyone travelling into and out of what's become a very busy hospital servicing the wider area," said Northland highway manager Brett Gliddon.
"As traffic volumes have grown it's become increasingly difficult for staff, visitors and patients to turn out of Hospital Rd and either left or right on the state highway."
The upgrade would improve safety for pedestrians and cyclists by extending the existing cycle lanes a further 700m along the state highway to just past Hospital Rd. This would also boost cycle connections between Maunu and the city.
Preparation works were finished before Christmas.
Some property access would be affected for short periods. Residents should take extra care and follow the directions of work crew when driving in and out of their properties.