Sometimes, despite our best efforts, intervention plans fail to produce an adequate improvement, leaving the instructor/preceptor in the difficult situation of being unable to provide a passing grade to a student in placement. Research on the subject reflects instructors preceptors often struggle with this decision when it arises, and sometimes ‘fail to fail’ students despite having serious concerns about their ability to safely practice as professionals after graduation. Preceptors cited not having kept adequate documentation as a barrier to failing students, as well as not wanting to have to go through all the necessary steps involved, worrying about damaging a career trajectory or simply not wanting to deal with the difficult nature of the problem.
Keeping detailed documentation and involving the school are essential to the process of navigating an unsuccessful placement; the school may be able to negotiate alternate arrangements such as providing the opportunity to later re-do the placement, extending it, or having the student take a leave to address issues that have been impeding the process. It is important to keep in mind that we all have a responsibility to both our students and to the integrity of the professions to which we belong; failure to address serious practice issues is a disservice to the student, the public, and the profession as a whole.
Knowing the academic policies and procedures of the program your student is taking is important in this situation.
See Dudek, Marks and Regehr, 2005 [PDF] for relevant information on this topic.
 Dudek, N.L., Marks, M.B., & Regehr, G. (2005). Failure to Fail: The Perspectives of Clinical Supervisors. Academic Medicine, 80(10): S84-S87. Available online at: http://www.gme.umn.edu/prod/groups/med/@pub/@med/documents/asset/med_96686.pdf