Here is the quote, in full, from Soferim:

There are four points to make here:

1.  This is not part of the Talmud.  Soferim is what is called a “minor tractate” and was composed about three centuries after the Talmud was completed.

2.  This paragraph is clearly not taken by Jews as canonical and binding.  Note where it says that the best of physicians are bound for Gehinnom (a Jewish reference to an unpleasant afterlife).  If this were truly taken serious by Jews, there wouldn’t be any Jewish doctors.  And yet, throughout the ages, from no less a sage than Maimonides down to today, there are plenty of Jews who are doctors.  

3.  As for the subject at hand, you’ll notice that the quote presented left out “in times of war,” a clear sign of editing to make things look bad.  However, if one examines the source of this quote, it can be seen that this is referring exclusively to a time of war. 

The quote first appears in the Mechilta (on Exodus 14:7).  Here is the quote:
  

As you can see, the context of this quote is clearly in times of war.  It is discussing the time when the Israelites left Egypt and were being pursued by the Egyptians to be returned to slavery.  Nowhere does it say that this applies in all places and all times.

4.  While it may sound shocking to a 21st century reader, one has to also keep in mind that in the times that Rabbi Shimon lived (~ 2nd century), killing your opponents in battle was common and the norm.  Prisoners of war (as we understand and use the term today) did not exist  at that time and would not for well over a millennium.   This treatment of enemies during times of war was no different than what would have been done by any nation at the time.