I live here in Cleveland, where the Cleveland Clinic is based. The reality behind the situation with them not hiring smokers is very simple...
They are one of the premiere medical centers in the entire world. People from all over the world (kings, queens, princes, royalty, celebrities, politicians, etc) pay big time money to have the Cleveland Clinic take care of their medical needs. They are growing at an exponential rate and will eventually take over the majority of downtown Cleveland. As it is, the Cleveland Clinic is so large and so powerful that it could literally be considered it's own city. Before too much longer, they will own and operate pretty much every health-related operation in the entire state of Ohio. With that being said...
They don't want their employees to smoke because it's a great PR move. It might seem like this is bad press for them, but it's actually GREAT. Their job is to provide people with exceptional medical care and exceptional medical and health-related advice. Why would someone who is paying hundreds of thousands of dollars want to take advice on health from someone who smoked? Why would someone who is suffering through lung cancer want to get lectured on their health by someone who smoked? They wouldn't. Why? Because, it's extremely hypocritical for doctors to hand out advice that they aren't willing to follow themselves.
Would you take John Goodman seriously if he told you that you needed to lose weight or listen to Chris Brown tell you how to treat women with respect? No, absolutely not. Just like you wouldn't listen to someone smoking a cigarette tell you that you should stop smoking.
And yes, there are other hypocritical things that doctors do as well (drinking, drugs, unhealthy eating, etc), but the Cleveland Clinic, and the other health systems that are adopting the no smoking policy, are just taking the first step by not hiring smokers.
And, whoever it was that mentioned insurance costs was right. The hospital's insurance payments will lower if they employ non-smokers because it makes for a more sanitary environment which positively effects the health of the patients, therefore, lowering the risk of the insurance companies having to pay out more money than they really want to.