Conrad and Karen were best buds in the hospital, which is like making friends at summer camp, just with more electroshock.
Conrad is upset that Karen now seems distant.
Karen is afraid to be too close to Conrad because "it's contagious" (7.50). Either she thinks depression spreads by air, or she thinks that Conrad has SARS.
Karen and Conrad catch up a bit, but she soon excuses herself, and Conrad doubts he'll see her again.