Oh you are a dear to be helping her in these extreme conditions. I think I might talk to her first. I would be very kind and understanding and just plain tell her that she is overwhelmed and not healthy. Tell her what you have seen and it is not good for her, you or the dogs. Talk about your concern regarding her health..alcohol and cigarettes are not a path to recovery. Ask her what she plans to do to help her own situation? If she says she doesn't know what to do then you can tell her that there are programs out there that will help her.
The dogs can be placed in better care. Ask her if she would like you to find her some help? If she doesn't want help or makes no suggestions to get help then I would do what the nurses suggested. Try the nice way first to get her involved in helping herself..if she doesn't take it then you have got to report her. She will know it was you but she will also know that YOU tried working with her.
She is sick..very sick. People that live in these situations are very sick mentally,emotionally and usually physically too. They can be the nicest people...but this is no way for those dogs to be living in. It breaks my heart!!
Good luck and best wishes!
I think you have a responsibility now to report what you have seen. But I would first talk to the woman and get a dialogue going. This is not safe for her or a situation that will help get her out of depression.