Overall, the song tells a tragic story of the loss of a friend to either suicide or drug overdose and the events leading up to his death. Let's start from the beginning and see what the lyrics tell us. The song begins with what is commonly called an intervention. Why the intervention is being called is not made clear, but the awkwardness of the situation is apparent in the first verse:
Step one you say we need to talkThe first step is getting the friend to sit down and have a serious talk. The gravity of the discourse and the unwillingness of the friend are evident by the narrator's need to assure the friend that what will take place is "just a talk." The friend agrees and proceeds to "smile politely back at" the narrator as the narrator "[stares] politely right on through." Although the two are close friends the pair must strain to be polite to one another. We can assume that the awkwardness of the situation is caused by both of them hearing things that they didn't want to hear as we will see in the second verse.
He walks you say sit down it's just a talk
He smiles politely back at you
You stare politely right on through
Some sort of window to your right
As he goes left and you stay right
Between the lines of fear and blame
And you begin to wonder why you came
As the duo strains to be polite to one another we get the first hint that the intervention will end poorly "as he goes left and you stay right." The narrator will not diverge from his path, but neither will the friend and from here their paths diverge forever. As the intervention gets rolling the narrator tells us that he must balance "between the lines of fear and blame" struggling not to blame his friend but fearing that he will not reveal enough to convince his friend to change. By the end of the first verse things do not look good as the narrator "[begins] to wonder why [he] came."
The chorus, repeated after each verse, is a retrospective lament of the narrator's failure to save his friend:
Where did I go wrong, I lost a friendIt serves to reinforce the fact that the friend is ultimately loss in the bitterness we will see develop between the two. But despite the ill will that the two feel when they depart each other's company the narrator tell us that he "would have stayed up with you all night / Had [he] known how to save a life." We learn that the narrator would have stayed up with his friend all night had [he] known how to save a life. Said in another, less lyrical, way, the last two lines could read: "I didn't know how to save your life, but I would have stayed up all night with you if I did."
Somewhere along in the bitterness
And I would have stayed up with you all night
Had I known how to save a life
The second verse takes us back to the intervention:
Let him know that you know bestAnd we see the narrator's attempt to "slip past his defense" to convince his friend that the narrator's advice should be taken, because "after all, [the narrator] does know best." Once the narrator has built his credibility he does not grant his friend innocence, but rather holds him accountable for his actions. The narrator then proceeds to "lay down a list of what is wrong," a list of actions and behaviors that aren't acceptable in the narrator's eyes.
Cause after all you do know best
Try to slip past his defense
Without granting innocence
Lay down a list of what is wrong
The things you've told him all along
And pray to God he hears you
And pray to God he hears you
During this verse the friend is silent, presumably listening politely as the narrator tries to speak sense into his friend. The verse ends with the narrator praying to God. At first this line seems to indicate that there may be a ray of hope because the narrator "[prays] to God [who] hears [the narrator]," but a closer look reveals that this is not what is being said. The song isn't saying "pray to God; [God] hears [the narrator]," but rather, "pray to God [that the friend] hears [the narrator]" All of the narrator's sources have been tapped. He has built up his credibility, laid out his case, and even appealed to God that his argument will bear good fruit. But the reiteration of the chorus that follows reminds us of the untimely end of the friend.
The final verse brings us to the end of the intervention. It is here that the friend replies to the narrator's accusations and condemnations as the narrator lays out an ultimatum:
As he begins to raise his voiceAs the friend raises his voice in anger, the narrator presents him with a choice. Either the friend will continue down his self destructive path until he loses the road and destroys himself or he can abandon that road and try to break his deadly habits. The narrator knows that he has forced his friend into a corner where he will either "admit to everything" and accept responsibility for his actions "or he'll say he's just not the same" and cut his ties to the narrator as he continues to pursue his vices. The verse does not tell us explicitly which one he will do, but things do not look good as the narrator "[begins] to wonder why [he] came."
You lower yours and grant him one last choice
Drive until you lose the road
Or break with the ones you've followed
He will do one of two things
He will admit to everything
Or he'll say he's just not the same
And you'll begin to wonder why you came
The title of this song is misleading in that it does not speak on the subject of "how to save a life" but rather laments "had I known." Had he known how to save a life the intervention would have been the turning point for his friend and not the last warning sign before his senseless suicide or drug overdose. What appears on first listen to be an uplifting song that tells us how to save the lives of our friends turns out to be a dark lament of a failed intervention, a failed friendship, and ultimately a failed life.