You are limited in the number of potions you can carry in Final Fantasy XVI. You can check out this guide at Seeking Tech to see how you can restore your HP without using any healing items.
Method #1
The first method is the most convenient one as you can simply die during combat.
In the game over screen, you can then select the retry option, which will let you fight the same battle again at full health to go along with a full array of potions.
Some boss battles have multiple checkpoints. By dying and then restarting, you are able to start from the latest checkpoint with full HP and fully stocked healing items.
Method #2
The second method to heal without using potions is by leveling up. By going up to the next level, your HP will automatically be restored.
Method #3
For the third method of potion-less healing, you have to return to your hideaway. The trip back to your home base will restore your health bar to the fullest. You should be able to see the HP meter be filled up once you warp back.
Keep in mind that you may have to start some store missions all over again if you decide to fast travel to the hideaway. In these cases, you should see a notification warning you about having to restart the mission from the beginning if you decide to leave for a different area. To save time, you are better off dying and then retrying again to restore your HP.