Business Process Reengineering (BPR) is practiced in so many organizations of differentrncountries to improve the efficiency of any organization by automating its business processrnthrough re-engineering. Currently in Ethiopia, hospitals are adopting the concept of BPR.rnYirgalem hospital is one of the public hospitals in Ethiopia that has started the implementation ofrnBPR to enhance service delivery.rnThe major objective of this research is to assess the challenges and opportunities of BPR forrnenhance service delivery at Yirgalem hospital. The study has employed the descriptive researchrnmethod in order to perceiving challenges and opportunities in the enhancement of servicerndelivery during the implementation of BPR. Analysis of the data collected shows lack ofrnunderstand/awareness of the employee about the benefit, objectives and principles of the BPR;rninadequacy of facilities, equipment, human power and medical supplies in the hospital; inrnaddition to lack of information technology and poor measures of costs and benefits, quality andrnspeed of service, communication, commitment of leaders and organizational learning.rnTo improve the efficiency of service delivery, the following capacity building measures arernrecommended. Training, addressing shortage of facilities and equipment, research/ assessmentrnon employee attrition, improving communication, leadership development, employees workrnenvironment, remuneration and outsourcing some of its activities. The management of thernhospital builds internal and external benchmarking allows the transfer of learning from one re-rnengineering process to another in the same organization