Eccentric elderly psychic Sally Druse becomes convinced that Kingdom Hospital is haunted; meanwhile Peter gets a new roommate - the very same junkie who ran him over with his van.
Dr. Hook starts to believe Sally. A vicious killer is brought in for treatment and music arrives with him. The Pompous Dr. Stegman faces the angry mother of his former patient, Mona, a little girl severely impaired by a botched surgery.
Stegman attempts dangerous brain surgery on a street bum with a brain tumor. Meanwhile Dr. Hook shows Dr. Christine Draper a dark hobby of his which he keeps in the basement.
Chief of maintenance, Johnny B. Goode, finally appears. Peter, Sally, Hook and all their friends go back in time to learn the truth behind the deadly mill fire and prevent it. Evil ghost, Paul, convinces unhinged Stegman to shoot them all.
A malevolent ghost resembling a hideous teenage boy begins to plot Peter's death using the killer. Sally comforts her dying friend and tries to learn the little ghost girl's name. Dr. Elmer loses his mother.
Dr. Stegman is hurt during his initiation into the Keepers of the Kingdom. Mary takes Peter into the netherworld of Swedenborgian Space to save the life of the giant anteater, Anubis, who originally saved him. The killer makes his move.
Antubis decides to help the lawyer get a new donor heart with a little help from Otto's seeing eye dog, Blondi. Hook learns about the 1869 and the 1939 fires. Dr. Elmer and his crush Dr. Lona have an out of body experience.
A sleazy lawyer, who is being accused of statutory rape, suffers a heart attack and arrives in Kingdom Hospital. Sally contacts Peter and his wife. Dr. Elmer gets reprimanded for his severed head prank gone wrong.
Natalie Rickman and Mrs. Druse plan to gather their friends together to break into the spirit world. Meanwhile Stegman is humiliated when incriminating and embarrassing posters of his malpractice begin circulating.