Say you take the 14 non playoff teams and the 2 worst playoff teams for a total of 16 teams. You play the first round. The losing teams would be assigned picks 9-16 in order of their records. This means that the worst team in the league would at least get the 9th pick in the draft. While this would leave them with an outside shot at a star, 9th isn't high enough to blow up your roster and tank for.
In the next round the losers would be assigned picks 5-8. Then picks 3 and 4 would be assigned to the semi finalist losers, and finally the first and second pick would go to the winners and runner ups respectively. Some people might say the best team would be guaranteed to win, but I don't think that's necessarily true because it's single elimination. The gap in skill between college teams is much wider than among nba lottery teams, and they STILL regularly have upsets.
There are problems with this though. When would these games be played? Also, motivating players could be an issue, although idk why guys wouldn't want to improve their teams.
I think it could be fun tbh. Imagine the Raptors going on a run in the tournament and winning the rights to Andrew wiggins?