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Assuming you are in the US. We just went through this with a family member. Her mental decline happened in the matter of a few months, following an accident. They had a prior TBI, and something just snapped, I don't know.
I can't attest to how to get a dementia diagnosis. Their decline was completely atypical of regular dementia, but it did meet the technical definition. They were admited to the hospital and it took a long time for the doctors to really pick up on it. Instead of answering the questions, they would just get hostile. Eventually, things would slip, but we had a really hard time getting a straight diagnosis, even though staff treated her as a dementia patient.
As someone else mentioned here, you need to find out who, if anyone, will be granted power of attorney and medical power of attorney, if he is diagnosed. Technically, if he is diagnosed, they will have complete control over his finances and medical decisions. If he has made no plans to transfer POA / MPOA, you / your family will independently need to pay for any and all care. (Although you may have to anyways, as rules will vary state by state, for who is responsible for the bills). I would consult a lawyer that specializes in elder care. There may also be a regional government elder care department that maybe able to give you some information.
Getting a guardianship can take years, and emergency guardianship only lasts for a few days. If there is no one designated, and your grandfather is not willing / able to sign the forms... as someone told us, "Oh, your in a pickle." If it comes to this, he will have to have progressed pretty far with the disease for any doctor to sign the paperwork. Guardianship means that all rights are stripped from them and given to someone else. Even though the guardian will have to submit to regular audits, people still abuse the position, and the doctors also have a responsibility to safeguard against this.
If he has dementia, medicaid will help cover costs, but you need POA to apply for him. If he has retirement money, you cannot access it without POA. If you can not pay, no place will take him. Full stop, unless someone takes pity on you and you can work out a deal of some sorts.
Medicare will pay for about 20 day in full, and up to 100 days partially, with stipulations, if there is a 3 day hospital stay involved. Fyi. Hospitals in the US must discharge to a safe place. If the home is "not safe" they cannot force you to take them home regardless of what they say. They will threaten to kick them out of the hospital, they will threaten guardianship, they will try to guilt you. If you can not care for them, then refuse to take them and tell them it is "not safe". Do not sign discharge papers until you consult a lawyer.
Care homes will need to specialize in dementia, or they will not take him, so your options will be limited. Hobestly, I think it ultimately has to do with fire safety.
I'm sorry if this is scary, but it's been a nightmare for us, and I don't wish this on anyone else. The sooner you start preparing, the smoother it will go once the time comes. You really have to be at the top of your game to navigate the (again US) medical system, if your trying to care for someone else. Of course, in this country, it all comes down to how much money you have.
Good luck.