Young(er) Grace is in bed in the room that she shares with her stepsister. One night, they're both awakened by noises and Grace gets up to investigate. She creeps down the hall and peers into the room at the end, where she sees her father being axe-murdered by what turns out to be a farmhand. Grace runs away (in her little bunny slippers) and she kind of misdirects her pursuer to make him think she ran out the front door, but really she ducks into a closet. Which is a mixed blessing, because inside the closet are the chopped-up remains of her stepmother. Grace explains to Kit that the next day her stepsister Patsy accused her of the crimes, as Patsy and Red -- the axe-murdering farmhand -- were lovers and planned the whole thing so they could have the farm for themselves. Congratulations? Grace says nobody believed her, but Kit's pouty lips say he does and her giant eyeballs look grateful that someone does.
Lana is meeting with Dr. Thredson, who wants to know why she and Kit and Lana returned to the hospital the other night after escaping. Lana stonewalls, but we see a flashback to movie night, where Sister Jude's conviction that "a Mexican, a deviant and a pinhead" were the ones who escaped make them think that Shelley really got out. So, you know, good for her. They also make a pact to never tell anyone about the Creatures they saw out there, lest they be branded even crazier than they already have been. Back in his office, Thredson tells Lana that she doesn't belong at Briarcliff and that she was right to try to escape. Lana scoffs at the hypocrisy of a medical professional to say that when his own establishment -- while not considering her a "danger" worthy of being institutionalized -- nevertheless defines her as "sick" under their "bible," a.k.a. the Diagnostic and Statistical Manual of Mental Disorders. I've probably said this before, but my natural tendency to agree with Ryan Murphy's political and moral stances is almost always hindered by the fact that he writes them as if he's copying the information directly from an informational pamphlet. Or like we should give him an award for being able to cite the DSM. Anyway, Thredson wants to help her -- he sees a lot of himself in her (translation: he thinks she's smarter than all the drooling people-husks she's now surrounded by and he thinks of himself the same way), and he doesn't think she'll survive in here. He says if he can convince Sister Jude that he's cured her, she won't have any choice but to let Lana go. Lana tells him about how there's actually no cure for what she has, but Dr. Thredson tells her she doesn't have much time. He's leaving in a week, so she has to make a decision soon.