I read it when I was about 12, and was burning through every teen fiction book our local library had!
The narrator was a girl of about 12 or 13, who starts hanging out with the class loner and playing outdoors after school. They play with dolls and create a little fantasy world, but the narrator keeps their friendship a secret because she is embarrassed. Eventually she finds out that her new friend is troubled because she lives alone with her grandmother who has dementia, and she has to decide whether to go against her friend's wishes and tell an adult, knowing that her friend will go into care.
It was set in or around Philadelphia and was pretty bleak and haunting (or so my 12 YO self thought). I'd love to read it again but I can't remember the title, author or even the names of the characters.
Anyone recognize it?