A new style of leadership in the NHS could deliver lower mortality, better patient outcomes and financial savings, according to a new report.

The NHS should move away from the predominant "pace-setting" style of leadership based on meeting targets, and towards a new model based on stronger engagement between staff, clinicians and patients, says health policy think tank The King's Fund, reporting on a year-long review which builds on its 2011 study that criticised political attacks on the role of NHS managers.

The review highlights the links between organisational performance and leaders who engage staff, patients and others in improving care. For example, it says, evidence suggests a strong correlation between levels of staff engagement and hospital mortality rates, and that by increasing staff engagement to the level of the top 20% of hospitals, the average acute trust could reduce patient mortality by 2.4%.

Moreover, this could save an estimated £150,000 annually per trust by reducing staff absenteeism alone, indicating the potential to make substantial savings across the NHS as a whole, it adds.

The review also finds strong evidence that organisations with medical engagement generally have higher-quality patient care, improved productivity - including significantly lower mortality rates - and better financial performance.

It highlights the importance of NHS leaders engaging across organisational boundaries to deliver integrated care, and calls for a stronger emphasis on increased patient engagement to improve outcomes.

Leadership for engagement needs to be embraced at all levels of the NHS, from the front line to the NHS Commissioning Board, the review stresses. This will require the new Leadership Academy to promote a diversity of leadership approaches, for NHS boards to set the tone for staff and for team leaders to create a climate that emphasises patient care and enables staff to perform to the best of their abilities, it adds.

"Instead of making swingeing cuts to the number of NHS managers, our research suggests that a new style of leadership could significantly improve financial and service performance," said The King's Fund chief executive, Chris Ham.

"The reformed NHS must leave behind the command and control culture that has dominated health policy in the last decade and develop leaders who can engage others to deliver further improvements in performance and patient care," he added.

The review was welcomed by the NHS Confederation, which said it "again nails the myth about the role of management in health care."

"The NHS is changing and it will require a different style of leadership to reflect the way in which health services have to respond to patient need," said the Confederation's chief executive, Mike Farrar.

"The old style of command and control has to go and be replaced by greater staff engagement and leadership. Organisations will need to work much more closely together to make sure services are truly joined up and put the needs of patients - not the convenience of organisations - first," said Mr Farrar.