I'm gonna say it right now, I'm not a big Carlos fan. To be honest, most of the time, I pretty much hate him. But lately, and especially this episode, we can see him grow and it makes him really likable.
The scene where he has to give up Kylie was simply heartbreaking. I had not cry for Third Watch since Bobby's death but that went straight to my heart. The scene where he's feeding her and talking to her was also very touching.
I personally don't think he should have had to give her up. I understand why he felt she had to, he saw for her the opportunity to have a "real" family, with grand-parents, a sister and a house, and he can't give her that. But I don't think it's necessary for a child to have all of that. Sure, if you can, it's great, but if not, it's ok too. He obviously loves her very very much and more importantly wants to take care of her. That should be enough. Sure, he needs help and he's struggling right now, but he would have adjusted and gotten the help needed. And she would have been as happy with him than with her new family, because she would have had a dad who loves her. But that is obviously just my opinion.
I didn't like Doc in that episode at all. He was not helping Carlos at all. He should have been a lot more supportive instead of just telling him he couldn't do it and point out all of his flaws. If he had been more supportive, maybe Carlos wouldn't have had to get free babysitting in unethical ways.
As for the other characters, Kim's storyline was uninteresting, but Alex's was good. Who likes doctors who think they are superior anyway? Good thing she gave him a lesson in humility.