Designing Kitchens and Bathrooms - Bathroom concrete walls

We started to remodel our bathroom and the first thing we needed to do was remove the old tile from the walls. When we started chipping the tile off we found the tile was glued to a concrete wall about an inch and a half thick.

The house is old and there is not a shower in the main bathroom and that is the main reason for the updating that we are doing. I am looking for suggestions on what to do with this wall. I am thinking that due to the size of the area around the tub it would be best to tile the shower area. Can I put the tile right on the concrete or can I put some drywall on the concrete or is it best to take out the concrete and start over with the wall. If it is best to get rid of the wall how would you suggest taking it out?

Thank you so much for any help you guys can provide. I was really surprised to find the concrete behind the tile and just don't really know what to do right now with it and don't have the money to pay someone to do this project.

Sounds like you have a mud wall, which if you can leave in a decent condition, is a very good substrate for tile.