There is a whole lot more at stake if this person is allowed to continue in training.
Besides putting you at risk, because you know of of this person's condition, other students, patients (in the future) will also be at risk. If there is injury or further damage to a patient, it will come back to you. We do live in a lawsuit happy society.
As others have posted, this person really needs to step back and get themselves together first.
I don't think you are overstepping your bounds as an instructor as far as bringing it up to higher authority in the school and hopefully they will act on it. You are looking out for this person, (and the school), maybe by some chance they will take the proactive step in the right direction.
Sometimes not an easy call..
Just an opinion, hope all goes well