Tenet ( THC) is looking for a pain-free way to stop the bleeding.

The ailing hospital chain announced plans Friday to consolidate dozens of business offices in an effort to slash expenses by $75 million annually. But the fresh cuts won't leave the company or its workforce unscathed. For Tenet, the consolidation means a big upfront investment -- with no immediate return -- at a time when cash flow is diving and the company is operating in the red. And for up to 300 Tenet employees, it means pink slips in a frighteningly dark job market.

For months, Tenet critics have been calling for more decisive cuts at the top. They would like to see an end to the huge executive paychecks that made ousted CEO Jeffrey Barbakow the best-paid executive in the country last year, as well as a cheaper corporate headquarters than luxurious Santa Barbara, Calif.

In response, Tenet has pledged to become more cost-efficient. But for now, it is pointing elsewhere to signs of progress. On Friday, the company touted its new consolidation plan as a step in the right direction.

"Although these initiatives will require some incremental costs in the near term, we expect substantial returns," said Tenet CFO Stephen Farber. This plan is "consistent with our aggressive focus on streamlining the organization, increasing efficiency and reducing costs."

Following the consolidation, eight regional offices will handle the billing and collection activities now processed by 17 central business centers and 39 hospitals. Nearly 10% of Tenet's billing and collection staff could lose their jobs in the process.

"Where possible," Tenet said, "alternative employment opportunities within Tenet will be identified for affected employees."

Tenet expects to carry out the consolidation over three years at a cost of $275 million. It plans to spend around $55 million -- the sum it lost in the latest quarter -- this year alone. After that, the company will spend $125 million in 2004 and an added $95 million in 2005-06 as the project wraps up and begins to pay off. The company expects to achieve an immediate one-time gain of $100 million, through a reduction in accounts receivable, as soon as the project ends, and ongoing savings of $75 million annually beginning six months afterward.

"Importantly, these consolidations and system improvements will be implemented without disrupting patient care or affecting our financial reporting capabilities," Farber stressed.

But Tenet is under heavy fire for its patient care and financial reporting already. The company stands accused of performing risky and unnecessary surgeries just to boost profits. And it's under multiple investigations for allegedly bilking Medicare and misleading investors in the process.

Tenet has denied any wrongdoing. But the company continues to be a magnet for criticism, with its booted CEO fueling much of that ire. Barbakow first raised eyebrows by selling $111 million worth of Tenet shares at the top of the market even before scandal engulfed the company. He recently triggered fresh outrage by walking away from the company with additional riches.

Under a new "executive severance protection plan" approved in January, several months into the current scandal, Barbakow became eligible for a generous golden parachute. He left the company in May with the promise of three years' worth of salary and bonuses -- totaling more than what most working corporate executives earn -- and additional perks like health coverage and a company car.

The new severance plan, detailed in last week's proxy statement, reignited investor fury aimed at the Tenet board. But Bernice Bratter, head of the compensation committee that pushed the parachutes through, won't feel the heat for long. Bratter and fellow compensation committee member Maurice DeWald, both longtime Tenet directors, plan to step down at the company's July 23 annual meeting.

Tenet has pledged to replace three veteran board members and name a nonexecutive chairman in an effort to strengthen corporate governance and regain the confidence of the investing public. But in the meantime, the company's stock continues to slide. The shares fell 46 cents, or 2.9%, to $15.43 on Friday. The stock is down roughly 75% from its prescandal high and has slid 6% during the big market rally this year.

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