Learn Hardcore Spanish (Latin America): Mi hermana dice que debería dormir más, pero siempre se acuesta tarde. - My sister says she should sleep more, but she always goes to bed late.

In Spanish, when a verb like decir (to say) is followed by a whole sentence (a clause), you normally need the conjunction que to introduce that clause.

Mi hermana dice que debería dormir más.
= My sister says (that) I/she should sleep more.

In English, that can be dropped: My sister says I should sleep more.
In Spanish, que usually cannot be dropped in this structure; Mi hermana dice debería dormir más sounds wrong.

Who is the one that “should sleep more”—me or my sister?

Grammatically, debería is ambiguous by itself because Spanish often drops subject pronouns:

yo debería (I should)
ella debería (she should)

In Mi hermana dice que debería dormir más, pero siempre se acuesta tarde, the second part:

pero siempre se acuesta tarde = but she always goes to bed late

clearly refers to my sister (3rd person singular: se acuesta).
So the most natural interpretation is:

My sister says she should sleep more, but she always goes to bed late.

If you wanted to make it 100% explicit, you could say:

Mi hermana dice que ella debería dormir más… (she should)
Mi hermana dice que yo debería dormir más… (I should)

What form is debería? Is it a tense, and what does it express?