Turn the matter over to your insurer immediately. Cooperate with your insurer. If you are sued, you will be provided counsel as part of your cooperative agreement with your insurer.
And next time, do not say anything at the scene about fault.
DO NOT agree to any settlement with the doctor or the hospital until you have met with a lawyer. Many times one or both will try to get you to "settle cheap and fast" before you have legal representation. This is always a bad idea. In Illinois the parents of a baby boy about to undergo a circumcision are entitled to be fully informed about the risks. Meet with a lawyer Monday morning.
The grantor of the POA is the only one that may revoke. Given his dementia, he has not got the mental capacity to revoke. And, if you step back and think it over, the fact that he chose his daughter to be POA before his state of mind diminished, his wishes are in place as is.