Hi, Susiesoo, and welcome to Talking Point. There's lots of good advice and information and support available here and I hope you feel welcome and find it helpful. You can search past threads or just have a browse around, or come and ask specific questions.
I don't know if you've read any of the information or factsheets on the Alzheimer's Society website, but they have lots of good information about dementia there. A place to get started might be here:
https://www.alzheimers.org.uk/site/scripts/documents_info.php?documentID=84
Or here:
https://www.alzheimers.org.uk/site/scripts/documents.php?categoryID=200343
Maybe you might have a look round when you have time.
I am sorry I don't know the answer to your question, because I don't understand enough about neurology and the brain and dementia to know quite why things happen. But I can tell you that I have experienced this same thing, with my mother (73, Alzheimer's, no short-term memory). She will sometimes witness or hear about something that happens to another person, and then declare it was her, or that it happened to a friend or relative too, what a coincidence! Sometimes it seems to be her way of becoming comfortable with news, or making sense of something, because often she has limited understanding of what is going on around her. I've also had the experience where she and I and my husband have gone out to lunch or run an errand, and she will tell the care home staff that she ate this or did that, when it was actually me or my husband.
As these types of things don't generally matter, unless they cause her upset or agitation, I just sort of play along and run with it and gloss over things.
So maybe your dad remembers going to the hospital and that your sister was there, but not why they went, so puts together the pieces of information he can recall, with a story/narrative that makes sense to him. Or maybe your dad feels upset if he thinks about being at the hospital, so it's easier for him to "remember" that they went for your sister. It's hard to know.
It can be puzzling and frustrating, though. I do know that feeling!