We’re not quite sure why the health kept disappearing. The creatures are supposed to rag doll upon death, yes, and we planned to implement a settings page and overlays for the controls/collectible progress but fell short on time. Thank you for playing and offering feedback, Jake! <3 We hope to continue development and improve Hellshade!
Update: We believe the health issue is caused by the spawning of the fireballs. If the player moves forward when shooting, there is a chance you can be hit by it.