The HP system seems like it could work. When someone takes damage it should affect there character still. Perhaps something like.. If you're at half HP or below, your speed drops a rank. If your health is below 25%, you drop two ranks. Also, if you take a specific type of damage for example being bleeding damage. If you get injured in a way where you would be bleeding badly, you continue to take damage per turn. This can be regulated by rank.
S-rank (-25 HP per turn)
A-rank (-20 HP per turn)
B-rank (-15 HP per turn)
C-rank (-10 HP per turn)
D-rank (-5 HP per turn)
This can account for any type of damage. Like Burn, Crush, Bleed, etc. That way if someone gets hit by say, mountain crush and lives, they will still be injured, moving with less mobility and will continue to be drained of heath unless healed. Also perhaps add a critical hit. Like if a vital organ is specifically targeted, like a lung or heart. Double damage is done. This only applies to if that specific critical spot is targeted. That way if someone is hit, say with chidori in the heart. It will do double damage, killing most by doing 160 damage and those who live it will get the bleed damage in their next turn, so if not healed, they die from the access damage.