Abstract: Globally, healthcare systems are evolving constantly, becoming ever more complex in terms of the interrelatedness of system components. Healthcare system reform frequently involves complex challenges, primarily because there is a significant need to review the underlying policies and regulations associated with the sources of these challenges. A major concern for large healthcare systems worldwide has been how to eliminate or limit, recurrent challenges. Thus, this study intends to depict the impact of the challenges and their sources on Saudi’s healthcare reform by focusing on the public hospitals. A critical appraisal for the literature is paramount to formulate effective strategies and policies on which to structure reform. However, health services rate among the largest consumers of financial resources in the funding of services to the population which may entail extended policy conflict within government. The background information presented in this study reflecting that Saudi Arabia’s current public healthcare system is completely dependent on government support (excluding the private sector) with some inherent challenges and that the government has tried to reduce the burden of expatriate access to free public healthcare services provided to Saudi citizens by enacting a reform strategy presented by health insurance scheme. In addition, population growth and the consequent escalating healthcare demand, poses a major threat to the Saudi government by increasing healthcare expenditure which will ultimately force the government to create new legislation to finance the extended coverage.