I wasted $40k on a fantastic startup idea

You say “ So I built something people wanted. Consumers wanted it, doctors wanted it, I wanted it. Where did I go wrong?”

The fact that the people giving you the money I.e doctors / hospitals didn’t want to pay for your product proves you built something no one wanted. Wanted enough that they were willing to pay you money for it. Or go out of the way to find the budget for it.

Or the incentive systems in the US are completely screwed up when it comes to healthcare.

I was going to point out Kaiser, an HMO that provides both insurance and services. It's reputation is mixed. HMOs like that, or maybe the VA, would be perfect customers because their interests are mode aligned. Private practice doctors, not so much.

Nah, everyone wanted it, but for free.

I think the only thing that went wrong is the budgeting, OP might have made it had he dumbed it down a little and made it 100x more simple (on the backend).