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Up until this final part, McMurphy has won most of the battles against the Nurse, who seems to have something up her sleeve. When he returns from the successful fishing trip, she begins her open attack on McMurphy. She tries to convince the patients that McMurphy is fleecing them and doing everything for his own monetary gain. She points out that he has financially gained from the fishing trip and from numerous bets he has made with the patients. She is so successful with her criticisms of McMurphy that only the Chief and one or two of the others still believe in him. Then the Chief almost loses his faith in McMurphy over an incident with the control panel. McMurphy bets with the other patients that the Chief is strong enough to lift the panel. Since McMurphy has restored him to strength, the Chief is successful, and McMurphy wins the bet. But the other patients are very disillusioned about losing their money one more time.
McMurphy soon redeems himself. When the Black orderlies are administering an enema to the patients, George, who is averse to being touched and paranoid about dirt, refuses to have one. McMurphy supports him and gets into a fight with the orderlies. McMurphy does not seem to be fighting to win, for he is willing to accept the punishment for all the patients. The Chief comes to his aid in the battle; although they win the fight, they are both punished.
They are taken to the Disturbed ward for shock treatment. While suffering from his treatment, the Chief tells about his childhood. He remembers a game that his grandmother used to play with him; the game had a rhyme about "one who flew over the cuckoo's nest", a foreshadowing that the Chief will flee from the hospital, the cuckoo's nest. In fact, when he is returned to the ward after one treatment, he is a changed man. Because of McMurphy's efforts, the Chief feels strong and is determined to resist the fog
McMurphy is given four shock treatments within the week. By the time he is finally returned to the ward, he has achieved a legendary status with the patients, a fact that really angers Nurse Ratched. She threatens him with a lobotomy, foreshadowing what will eventually happen to McMurphy. He, however, still feels self- assured and believes that the Nurse cannot touch him as long as he behaves.
Knowing that McMurphy will be targeted from now on, the patients arrange an escape for him. McMurphy, however, is not ready to leave, for he has decided to have the party, where Billy is to lose his virginity. McMurphy bribes the night watchman into helping and arranges for Candy, the prostitute from the fishing trip, to attend and bring some booze. She also brings a friend, Sandy. The patients drink, have a great time, and lose control. McMurphy, who has too much to drink, does not seem to care. He ignores the patients when they snoop into the records and steal a narcotic cough medicine; he ignores them when they joke around and play tag in the corridor. Harding tries to make the others realize that the consequences of this party are going to be bad. He even tries to convince McMurphy to immediately escape so they can blame everything on him in his absence.
McMurphy decides to rest before escaping and lies down with Candy's friend in his arms. Billy falls asleep with Candy. They are discovered the next morning by Nurse Ratched. She threatens to tell Billy's mother about his behavior. Billy cannot bear such a thought and slits his own throat. When Billy dies, the Nurse blames McMurphy for his death. In retaliation for her lies and Billy's death, he tears open her uniform, exposing her breasts to all the patients. Her sexuality, which is her one weak point, has been exposed; as a result, she is rendered defenseless in front of all the patients. This exposing of her weakness has helped in completing the path that McMurphy has forged towards loosening her hold on the patients. She can no longer completely control them. She is, however, still in control of McMurphy and has him sent away to be dealt with severely. While he is gone, most of the patients, now strong enough to face the outside world, discharge themselves from the hospital.
When the staff brings McMurphy back to the ward, only the Chief, Scanlon, and Martini remain in the ward; they quickly see that a lobotomy has been performed on McMurphy. Now in a vegetable state, Nurse Ratched plans to use him as an example to other patients. The Chief cannot bear to see McMurphy in such a state. He puts a pillow over McMurphy's face and suffocates him. The Chief then escapes by throwing the control panel through the window, just as McMurphy has taught him to do. By killing McMurphy and escaping, the Chief proves that he has recovered; he also wins the final battle with Nurse Ratched.