Additional picture

It really depends on several factors:

What is the wall made of? Is it water proof? Is there a tile flange on the tub, and how did they overlap the wall board?

It would only be possible to do correctly if you gut and rebuild your alcove with new plumbing and waterproofing. And probably go with a different tub. That tub doesn't appear to have a tiling flange.

Now, you could probably gut the wall, fir it out to depth of the ledge on top of the tub, install an aftermarket flange, and then install the vapor barrier and cement board, new shower valves, and tile.....but that's a lot of effort to keep a tub that isn't that expensive to replace to begin with. After you've gone to all of the effort to demo everything, that would be the penny wise pound foolish approach.

I would just replace the tub spout and add a hand held shower.

Here is a link that might be useful: hand held shower.

Wow. Thanks for the responses! Very helpful.

Ill probably leave it as is. Would it be ok to tile the walls if I leave it as it is? Obviously put up some backerboard. Would that be ok?