Anyone know how what this is and best way to treat it?

My sweet LO broke out with this horrible rash almost a week ago. It started off small then eventually spread and worsened. Pediatrician said it was just a case of baby acne. Well it's spread to behind her ear and I'm even seeing bumps on her arms and cheeks. My motherly instinct tells me this is something more sinister. My LO had to stay in the hospital for a week after birth due to infection. Pediatrician sent a prescription for Mupirocin ointment to pharmacy. We haven't been using it for more than a day and it looks as though it's still spreading and beginning to look blotchy! I'm a ball of nerves and don't know what to do!! Anyone tried California baby Calundea rash cream?