- For more than 70 years, physicians in the Israeli health care system have been employed on a fixed salary rather than on a fee-for-service basis. The present report is a brief review of the origin and development of this unique salaried physician model and its effect on the terms of physicians' employment. Archival documents were reviewed. The salaried physician model was introduced to ensure egalitarian health care for patients rather than equal payment for physicians. It was accepted by physicians because it guaranteed their employment and income. However, over the years, the salaried physician model has evolved into a complex wage scale, with multiple fringe benefits that bypass formal agreements in order to reward individual physicians. In addition, the salaried physician model has encouraged illegal private practice, which is viewed today as one of the major problems of the Israeli Public Health Services.