Reilly tells Edward that he is too ill for a sanatorium, and Lavinia says she knows a hotel he should go to. The couple fights over who is more practical, as Reilly suggests that they are both too ill for his sanatorium as they both lack "honest minds." He tells Edward that he was lying by not talking about Celia. He then accuses Lavinia of concealing the fact that the cause of her nervous breakdown was not her husband's affair with Celia, but her own affair with Peter. "How did you know all this?" Lavinia asks, but Reilly says he cannot tell her. He tells Lavinia that after she visited him, he obtained some information about her from outside sources.
Reilly talks about the fact that when Lavinia left Edward, he became aware that he did not love Celia, which offended his own vanity and confirmed Lavinia's suspicions that he is incapable of love. Reilly suggests that Lavinia and Edward are very compatible, since Edward worries he is incapable of loving and Lavinia worries she is unlovable. "You could accuse each other of your own faults,/And so could avoid understanding each other." He suggests that they just need to reverse their thinking and come together from there.
Lavinia tells Edward that he can go to a hotel if he wants to be alone, but he insists that he has a case coming on Monday, so they both decide to go home. Before they leave, Edward asks what he ought to do about their friends and Lavinia asks if it was him who sent the telegrams. Reilly tells Edward to not concern himself with his friends' affairs, and the couple leaves.
When they are gone, Julia comes in the side door, and tells Reilly that she has brought Celia, but not told Celia that she is coming up to speak with Reilly before Celia's appointment. Julia leaves and Celia comes in. Reilly tells Celia that it is his job as a doctor to help his patients see that their problems are not that interesting. Celia tells him that she has been abandoned and it has made her aware of the fact that she has always been alone. She tells him that "it no longer seems worth while to speak to anyone!" He asks about her parents and Celia tells him they can no longer afford to live in town, so they live in the country.
Celia tells him that she shares a flat with her cousin who is abroad. She tells him that she feels as if everyone is alone and suffers from a "sense of sin." When he asks about her upbringing, Celia tells him that she was brought up in a secular household that taught her to think of things in terms of "bad form" or psychology. She tells Reilly that the man she loved seems "like a child who has wandered into a forest/Playing with an imaginary playmate/And suddenly discovers he is only a child/Lost in a forest, wanting to go home."
Celia says that she feels guilty for not having found "the treasure in the forest." Reilly urges her to try to have an ordinary life, even while knowing that people can never understand one another, but she suspects she can never make a life with anybody. Reilly offers her two options for how to proceed with her life, and she chooses the second, which is to be sent to a specific sanatorium that changes people. She says she will be ready to go by nine o'clock that evening. Reilly writes an address for Celia to give her friends and advises her to tell her family. He sends her away, telling her there is no fee for the session.
After Celia leaves, Julia comes back in. He tells her that Celia will do well at the sanatorium, but that he is worried about having sent Lavinia and Edward back to the world of the living together. Julia then tells Reilly she is worried about the fact that Celia is undergoing a process of transhumanization. They argue about whether Celia is ready, when Alex arrives.
When Alex comes in, Reilly tells him that the Chamberlaynes have accepted their destiny and that Celia has chosen to be sent to the sanatorium. The Nurse-Secretary brings in glasses for a toast and they say a mystical toast together. They discuss the fact that Peter has not yet come to them, and wonder if others will ever speak the words they speak. Alex says, simply, "Others, perhaps, will speak them./You know, I have connections—even in California."
At the beginning of this section we learn that, not only has Edward been having an affair with Celia, but Lavinia has been having an affair with Peter, the man who loves Celia. Thus, we see a strange web of pining lovers caught in a struggle for independence. Both Lavinia and Edward are looking for excuses to be locked away in a sanatorium after each having extramarital affairs, and we see that they perhaps have more in common than they initially imagined. Here, Edward and Lavinia become mirror images of one another: two dissatisfied, aging people who are looking outside of their marriage for satisfaction and a sense of self, when the institution of marriage becomes too suffocating.
Reilly manages to analyze Lavinia and Edward's relationship as a mutually convenient confirmation of each of their deepest fears. Where Lavinia worries that she is unlovable, Edward worries that he is incapable of love. Thus, when they do not understand each other, it seems to confirm their suspicions, which provides a perverse sense of comfort. He tells them, "You could accuse each other of your own faults,/And so could avoid understanding each other." In this analysis, he shows them that their relationship is simply an equation for ensured misery and all they have to do is "reverse the propositions and put them together."
Each of the characters grapple with some struggle between their desire to be among others and their desire to be alone. No sooner have Lavinia and Edward left than Celia comes in and complains about the fact that the dissolution of her relationship has made her feel as though she only wants to be alone from now on, and that she does not need the attention or company of others. "I mean that what has happened has made me aware/That I've always been alone. That one always is alone," she says. In this moment, we see that the tension between the publicness of the cocktail party and the privacy of being alone (perhaps in a sanatorium) is a tension felt by characters other than Lavinia and Edward. In the way that the play is a philosophical meditation rather than a strict narrative, we see that this question about wanting to be alone is a universal human condition, something with which many struggle.
When Julia comes back to talk with Reilly, we learn a bit more about the "sanatorium" to which Reilly sends people. Reilly implies that the sanatorium is not like others, and is a much more intense place, which often changes people in key ways. Julia suggests that the process that takes place at the sanatorium has to do with "transhumanization," a kind of optimization of the self through spiritual and scientific practices. It is from this place that Lavinia has returned, and to which Celia will soon go, but its exact nature remains completely mysterious to the audience.
The end of the scene is a curious one, in which we learn that Alex, Julia, and Reilly are all in cahoots in some kind of mystical society. They drink a toast to their accomplishments and to the world at large, using elevated and spiritual language in a kind of prayer. They pray for Celia's spiritual future, as she embarks on discovering her true purpose: "Protect her from the Voices/Protect her from the Visions/Protect her in the tumult/Protect her in the silence." This strange circle of characters, who at first seemed nothing more than shallow guests at a cocktail party, reveal themselves to be members of an unusual cult committed to the spiritual growth of their social acquaintances. Beneath the surface of the fizzy and superficial cocktail party is something much deeper and more perplexing.