Who says she is mentally incapacited?
MUSTANG54:
You did not mention by whom you were told that "it is too late to draw up this document," but unless someone, somewhere, and at some time in the past had filed a petition for a Mental Capacity Hearing at which your mother was officially found by the court to be Non Compos Mentis (Mentally Incapacitated), then there is nothing stopping her from authorizing a power of attorney.
So, if what you were told or are being told about your mother being mentally incapacitated comes from any source other than a court of law and only after a proper hearing and an examination by a court-appointed committee made up of physicians, nurses, and social workers, then you will do well to ignore them all and proceed with drawing up the power of attorney. The nurses at the hospital are just doing what they are told and are covering the bases and cannot be blamed at all, but that is not to say that they can decide on their own who is and who is not mentally sound.
The document that you need to draw up for your mother to sign is called an Enduring Power of Attorney (or Power of Attorney with Durable Provisions) which in most jurisdictions can also be a Healthcare Power of Attorney, empowering you by proxy to make healthcare decisions for your mother as well.
fredrikklaw