A new report by think tank Policy Exchange in the UK has recommended a number of measures that could help the NHS overcome the financial crunch by improving productivity and efficiency.

According to the report, incremental pay increases are costing the NHS $680m per year and instead pay rises should be linked to wider organisational performance.

The report also said reduced variations in clinical practice could reap gains of £7bn a year if all NHS organisations performed as well as the top 25%.

Top performing NHS managers and doctors should receive performance-related bonuses of around £30,000, it said.

It also recommended that the National Institute for Health and Clinical Excellence should evaluate existing NHS treatments and exclude those that no longer represent value for money.