The NHS could save £2.2bn a year by being more efficient in the way it works, the government has said.
The Department of Health will send "performance indicators" to trusts
A Department of Health report noted wide variations in the way trusts in England dealt with emergency admissions and how long patients stayed.
The Department of Health is to send 16 "performance indicators" to all trusts, detailing how to improve and save cash.
The government's chief medical officer has said unnecessary tonsillectomies and hysterectomies have cost £21m.
Health Minister Andy Burnham said the move was not about "penny pinching or cutting corners".
"Productivity is about working smarter, not harder and improved efficiency will deliver both better patient care and better value to the taxpayer," he said.
"Enabling trusts to compare themselves to other organisations in this way gives local staff the opportunity to identify where they should be focusing their efforts to improve services."
The government revealed reducing avoidable emergency admissions for conditions like angina and asthma would save £348m.
About £510m could be clawed back reducing the number of people admitted the day before a procedure - some trusts admit around 10% of patients the day before their operation whereas others admit 60%.
Improving the discharge process would save £975m, the government said.
Carrying out more procedures as day-only cases could save £16m, while reducing variation on the number of outpatient referrals would save £278m.
Cutting the number of unnecessary surgical procedures could save £73m, the government added.
Plymouth Teaching Primary Care Trust was among the examples used to illustrate how services could be improved.
The government said the trust could potentially save £2.48m if it cut unnecessary emergency admissions for 19 conditions.
Other money saving measures included prescribing cheaper cholesterol-lowering statins, reducing the number of agency staff used as well as cutting staff sickness and absence.
Nigel Edwards, director of policy at the NHS Confederation, which represents over 90% of NHS organisations, said the announcement was a "welcome step towards helping the NHS become more productive".
But he added: "NHS managers believe that we need to go further than this and radically overhaul the approach to measuring productivity by putting patient satisfaction and outcomes at the centre of a new approach."
Shadow health secretary Andrew Lansley said: "The government have let down the NHS and failed to provide necessary incentives for improvement.
"It's time for a change and genuine reform."
Liberal Democrat health spokesman Steve Webb added: "The government is right to highlight the need to improve efficiency in the NHS, but much of the wasted money has been because of constant government interference.
"Hundreds of millions have been wasted every time the government has reorganised the NHS - new bodies are created, only to be abolished a few years later.
"The Department of Health needs to get its own house in order, and not just lecture frontline staff who are already working at full stretch."