He is the caretaker for Tiffany who is suffering a terminal illness. When asked whether Santa Claus is real, he reads Tiffany the "Yes Virginia there is a Santa Claus" newspaper editorial. Sadly, he states that Tiffany's case of her unnamed ailment is untreatable and admires her courage in not allowing herself to be depressed.
Although it is clear Dr. Willoughby is a general practitioner or possible oncologist, he notices telltale signs of potential suicide. He speaks with Mr. Foley in private that donations are often in round numbers and that this hunk of cash is beyond the normal salary of a maintenance man, implying George is giving away much of his capital (Mr. Foley also gave Willie the deed to his cabin) which are signs someone plans to end their own live. Dr. Willoughby correctly surmises that George is devastated by the loss of his bride and prescribes a session with a psychologist who would be better able to handle George's concerns. This prompts Mr. Foley to attempt suicide on Christmas Eve when most people were more focused on holidays than on work. Fortunately for Dr. Willougby, ALF is able to talk George out of taking his own life.