In an attempt to develop a streamlined astrophotonic instrument, we demonstrate the realization of an all-photonic device capable of both multimode to single mode conversion and spectral dispersion on an 8-m class telescope with efficient coupling. The device was a monolithic photonic spectrograph which combined an integrated photonic lantern and an efficient arrayed waveguide grating device. During on-sky testing, we discovered a previously unreported type of noise that made spectral extraction and calibration extremely difficult. The source of the noise was traced to a wavelength-dependent loss mechanism between the feed fiber’s multimode near-field pattern and the modal acceptance profile of the integrated photonic lantern. Extensive modeling of the photonic components replicates the wavelength-dependent loss, and demonstrates an identical effect on the final spectral output. We outline that this could be mitigated by directly injecting into the integrated photonic lantern.