The NHS in Scotland made £600m in efficiency savings last year, according to the first annual report on the service published in almost a decade.

Dr Kevin Woods, chief executive of NHS Scotland, said staff had beaten their target for cutting spending "considerably", as he unveiled the report yesterday.

Shifting patients out of hospital beds more quickly, brokering better deals for goods by negotiating nationwide contracts and prescribing fewer brand-name drugs are among the areas where savings have been made.

Officials said all the released cash had been ploughed back into improving frontline patient care. It is understood it has helped buy new equipment such as PET scanners, which show how well parts of the body are working and what they look like.

However, doctors warned that, with budgets under increasing pressure, patient care must not be compromised in the continuing drive to save money.

Cathy Jamieson, Labour's health spokeswoman, also said: "I am deeply concerned that the SNP are putting pressure on services by demanding further efficiency savings at the same time as they are imposing a real-terms cut in health board budgets."

The annual report shows the 2007-08 savings target was exceeded despite the service failing to reduce staff absence in line with expectations.

Health boards were aiming to cut the time lost through sickness to 4% of contracted hours. The deadline was missed and the latest figures show rates of 5%.

Dr Woods said: "We would like to have made more progress. It is important for people who are off work that we help them back to work as quickly as possible for their own health. We are trying to do that in a number of ways."

Schemes include rapid access to physiotherapy appointments.

Two other targets set for the NHS have not been met. These are waiting times for cancer treatment and ambulance-response times for emergencies.

The report also says the NHS is at risk of missing its goal for reducing the number of elderly patients repeatedly admitted to hospital in the same year. The aim was to cut multiple admissions by 20% by next April, but the problem is growing. Other goals are described in the report as "almost" achieved, such as thresholds for the proportion of children receiving the triple measles, mumps and rubella vaccine.

However, the NHS said it is either meeting, or on track to meet, most of about 30 national targets. These cover areas as diverse as swift access to GP consultations, cutting hospital acquired infections and screening 80% of women for cervical cancer.

Dr Woods said: "I think the report does reflect the very considerable achievements of staff throughout NHS Scotland. I would like to say right up front how appreciative I am of the hard work, commitment and dedication that underpins the performance which is described in the report."

Dr Peter Terry, chairman of the British Medical Association in Scotland, said he was pleased the critical role of staff in delivering Scottish Government goals had been acknowledged.

He added: "It will be increasingly difficult, however, to maintain this momentum in light of increasing financial pressures as spending on the NHS is squeezed. In the drive to save money, politicians and managers must not lose sight of the importance of maintaining high-quality care for patients. In order to ensure future success, government and NHS Scotland managers will need to work more closely with staff delivering services to patients."

The annual report has been published for the first time since 1999 after Scotland's official auditors said public reporting of NHS performance should be improved.