Mother-in-law in hospital now and there is going to be a competency hearing tomorrow. What should we expect?

If the Judge finds her competent based on information from her physicians, she is free to do as she pleases and live where is can and wants to. If she is charged with assault or other crime then her attorney may request a medical assessment to determine if she is a danger to others or self. If she found competent and charged with a crime the Judge will sentence accordingly. If from the assessment the physicians recommend that she be found incompetent by the Judge then she will need a guardian of person and estate. It sounds like you already have Power of Attorney or are her closest relative but she is not agreeing with care etc. Guardianship may have to be sought when a person is not able to care for themselves and due to physical limitations physicians say they need someone to help that person stay safe. Bottom line is if not found incompetent, a person makes their own choices and a Power of Attorney assists them to allow and accept the care needed.