The clinic administrator does not agree with the hospital auditor’s conclusion or grant that it is "broadly correct". The information she presents in her argument is meant to counter the auditor's conclusion, by undermining the auditor's assumption about what it means to reduce patients' suffering.

The hospital auditor does not confuse what is going on and what ought to be going on. If anything, he is very clear on the difference, because he insists that what is currently going on — the clinic's current use of funds — is different from what ought to be going on according to the terms of the Rodriguez family's donation.

And the clinic administrator does not accuse the auditor of confusing these things. She actually agrees with the auditor's descriptions, both of what is the case — the clinic is using some of the money to develop new diagnostic technologies — and of what ought to be the case — the clinic should be using the money to reduce patients' suffering. She just denies that there is a conflict between the two, since new diagnostic technologies actually can reduce patients' suffering.

The clinic administrator doesn't accuse the auditor of trying to tell the clinic what to do, even if that could be an implication of his argument. Though she rejects the auditor's conclusion, she does so not by complaining that the auditor is trying to tell the clinic what to do or how to do it, but by providing additional information to undermine an assumption the auditor makes.

The clinic administrator does not grant that a violation has occurred at all, let alone talk about how the severity of such a violation should be assessed. The point of her argument is that she doesn't think the clinic's use of the funds violates the funds' purpose of reducing patients' suffering.

This is correct. The phrase being reinterpreted is what it means to "minimize patients' suffering." The hospital auditor assumes that minimizing patients' suffering with these funds excludes using these funds to develop new diagnostic technologies: i.e., using these funds to develop new diagnostic technologies cannot help minimize patients' suffering. The clinic administrator suggests that minimizing patients' suffering doesn't just mean letting money flow directly to patients — say, to make them more comfortable — but also diagnosing and treating patients earlier, which can significantly reduce suffering. Thus, the clinic administrator undermines the assumption behind the auditor's conclusion.