In Pathway, when your character loses all their health points during a fight, they become knocked out. These characters are unable to continue fighting in the current battle. The only way to help that person is to use a medkit - it will revive and restore a portion of their health. A character who got knocked out has "KO" written above their head. Besides that, you can notice a small number next to that text. This number determines how many turns you have before that character "dies" and gets excluded from the expedition. This number depends on the Endurance (END) stat. If you won a battle but you didn't use a medkit to heal a character that got knocked out, you will keep losing 1 point every time you move on the world map.
The hero who lost consciousness and all points "KO" will not be available for selection during the next expedition due to hospitalization - if you really want to use that character, you can pay ($500) to recover that person immediately and make them available for the next expedition. If you start a new mission (and don't complete it), all hospitalized characters will become available again.
A dead character can be replaced with a dog - you can encounter this animal randomly while moving on the world map. This dog can't use weapons or wear armor. When it dies, the expedition is over.