Ryan has been in a hospital for four months getting help for his issues.  Jenna and Wilfred come to visit him, and he still sees Wilfred as a man in a dog suit.  Seeing Wilfred only makes Ryan more crazy, eventually causing the doctor to perform electric shock therapy.

Ryan, with the help of Wilfred and Bear, escapes from the hospital only to finally realize that the events at the hospital were in fact the dream.  The boring meetings he thought were the dreams were actually real life.  When he gets back there, he finds his basement just where he left it.