We had a "round table discussion" related to this a few years ago... I dug up the posts, and it seems the formatting is a little broken now, but there's some good information and discussion in there:
Game Design Round Table 0: No More Health (Conclusion)
Game Design Round Table 0: No More Health (This one is the original discussion)

Hope those are useful!

[font=arial,helvetica,sans-serif]How about using some form of remote area for health regeneration? (Like a safe room, something to be found or gave to the player for completing a task, or something similar) [/font]

[font=arial,helvetica,sans-serif]This itself has a whole load of flaws to it, but throwing the idea out there anyway.[/font]

Of course lots of RPG games already do this, it's called "The Inn". Some Rpgs, especially early RPGs had specific tiles you could save on or heal on, or use a tent (that allowed healing). This would be defined as non-regenerative healing in my view though.

One thing about regenerative healing that I think it should be turned off when a player is fighting. If the player is the current target of an npc, or the player is taking damage or attacking, he should not get the healing tick for 5 or 10 seconds.

if(current_time + 10 > last_combat_time) { regenerate() }