Healing from a sidebag item is a free action.
(But you have to commit to it before you know
you are actually taking damage. So in normal play
you can hold off until you know you are hit but before you have
Preacher healing from spells can have similar timing,
but can only be done if the target is in range and takes
faith points to trigger. Also each Preacher spell can only
be used once per turn.
We always play it like you do - revive first, then pass out loot cards.
If the party wipes you wake up (Take injury/madness roll then
heal all wounds/sanity damage) outside the mine.
The mission is failed - darkness escaped. check the mission failure
section for the specific mission you are on.
Then you travel to town if it is still there...
Appreciate the quick response! Thank you