Still failed to see a single game in which he did anything but run about like a headless chicken, Holtby that is.
AS for medicals, I can't believe anyone actually thought the question was worth responding to. Of course you can fail medicals, but they are like anything else. Take a car, one mechanic thinks it's fine, another genuinely thinks it's not fit and needs to be fixed, yet another one tells you they are iffy as a negotiating tactic.
Sometimes a player is fully match fit and has been playing but medical staff find an underlying issue that could cause problems over time, how much of a problem, how soon, depends. This is the issue that stopped Ba going to Stoke, they believed he was fine but had a knee issue that could basically stop him playing any time and they didn't want to take the risk. West Ham decided the issue wasn't that bad/likely to occur and bought him.
Another player will have a currently broken leg or serious injury, but medical staff can access an injury, scans, determine how long they think he'll be out for, chances of full recover. If you can get a 30mil player for 15mil while injured and the docs are 98% sure he'll make a full recovery, they'll recommend buying him, if they think he'll never be the same, they might say 15mil, joke, 5mil, worth the risk because he's that good.
You can't literally fail a medical, but a club can decide not to buy you based on what the docs tell you as a result of the medical. Currently playing doesn't make you certain to be recommended by medical staff, and being injured with a terrible injury doesn't mean medical staff will definitely not recommend you.
As with mechanics, or two of any people in any profession, two doctors can have entirely different opinions of the same injury/player/situation.