Despite his attitude and two bodyguards, Flash and Cougar, Doc Morbid is a competent physician, and his teachings can even be witnessed elsewhere in the wasteland, as seen with Razlo from Shady Sands.)
Apart from providing medical services to the people of Junktown, the doctor is also an entrepreneur; in his basement, he operates an underground butcher shop, where human body parts are prepared by him and his dwarf assistant Gretch. These parts are then packaged and shipped to Iguana Bob of the the Hub, for the production of "iguana bits."
He can heal the Vault Dweller, for a price. After talking to him, there is no way to leave without him going hostile, unless he is paid for the healing.
When badly wounded, the price to heal the Vault Dweller can be 500 caps (or more).
Enter the basement and then talk to Morbid, and he will accuse the Vault Dweller of trespassing. If he is then told to wait, claiming to be more powerful than him, he will offer a deal, in which, should the Vault Dweller agree, an eye will be removed, dolling out the Eye Damage status effect and setting Perception to 1. Speaking to him again afterwards, will cause for him to become immediately hostile.