(FORTUNE Magazine) – Amber Low spent more than six years struggling to get pregnant, trying fertility drugs and surgery. In a desperate build-it-and-they-will-come hope, she and her husband, David, even constructed a house, complete with rooms for the kids they wanted. Nothing worked. "I watched everyone else get pregnant," says Low. "They'd say things like 'Oops, I forgot to take the pill,' and it would just happen for them so easily."

Discouraged and running out of options, the Lows turned to in vitro fertilization--often a couple's last, best shot at getting pregnant. The procedure, in which eggs are fertilized outside the woman's womb and then implanted, often can overcome common obstacles to conception, including the damaged fallopian tubes, endometriosis, and immunological problems that were contributing to the Lows' infertility. After undergoing the process, they were finally able to have a child, Connor, now 3. After another round, they had twins, Colin and Emily, who are 1. Their dream home in Lake St. Louis, Mo., says Amber, 30, is a joyful "wreck," full of the "screaming kids" she always wanted.

The Lows have joined the growing ranks of infertile couples who are turning to in vitro fertilization (or IVF). Spending on IVF has swelled by 50% over the past five years, to $1 billion in 2002, creating big opportunities for entrepreneurs like Dr. Geoffrey Sher, who helped the Lows conceive their babies. He has built his Sher Institute for Reproductive Medicine (haveababy.com) into the nation's largest chain of IVF clinics, with eight locations, including Chicago, Los Angeles, St. Louis, and its headquarters in Las Vegas. McDonald's has sold billions of burgers; credit Sher with 15,000 babies and counting. His secret? Free initial consultations (which cost $500 elsewhere), lavishly attentive customer service, a high success rate, and a pioneering money-back guarantee. All are the fruits of Sher's innovations, both as a physician and as a businessman.

Sher is a big man who, at 60, can bench-press 300 pounds. He vibrates with energy. Brainstorms come to him on elevators, on airplanes, and as he drives his Porsche 911. He sometimes jumps out of bed at 3 A.M. and paces around muttering into a tape recorder until his wife kicks him out of the bedroom. He's a medical maverick who regularly dreams up controversial ideas that put him at odds with his fellow IVF practitioners.

But there's no arguing with the results that his chain delivers. For its patients, a single round of IVF produces a baby roughly 40% of the time, on par with other top-rated clinics such as the New York University Medical Center Program for IVF, Reproductive Surgery, and Infertility (nyuivf.salu.net) or the Jones Institute for Reproductive Medicine (jonesinstitute.org), a private not-for-profit run by Eastern Virginia Medical School in Norfolk. Sher's success rate is also well above the national average of 25%. The institute is privately owned by doctors who are partners; Sher and longtime business partner Dr. Ghanima Maassarani jointly own 51%. Sher says it's solidly profitable, with annual revenues growing to $20 million since its founding in 1998.

By moving quickly to build a national chain, Sher got a headstart in a highly fragmented industry. Virtually all of his 400 U.S. competitors are single-location clinics; a few are small regional chains. Their revenues vary widely but rarely exceed $2 million a year.

Sher's entrepreneurial streak runs deep, going back to his upbringing in the small South African town of George, 275 miles from Cape Town. His father earned a living selling fish bait, grinding coffee door-to-door, and peddling Christmas ornaments he made from eucalyptus seed pods. As a boy, Sher dreamed of going into business with his dad. But his father--who dropped out of school after eighth grade--pressed him to become a physician, saying, "You're not going to be like me, without an education."

Sher received his medical training at Cape Town's renowned Groote Schuur Hospital, where the first human heart transplant was done in 1967. There, he helped care for a woman who delivered the world's first surviving sextuplets, in 1974. That experience sparked his interest in fertility science. Following his residency, he moved to the U.S. and briefly settled into a cushy research and teaching post at the University of North Carolina. But it wasn't for him. "I felt restricted by the slow pace and bureaucracy in a university setting," he says. "Being outside the club had an advantage because it freed me to think outside the box."

In 1979, Sher went into private practice in Reno as a fertility specialist. English physicians Patrick Steptoe and Robert Edwards had just pioneered in vitro fertilization; after more than 100 attempts, the world's first "test tube" baby was born in 1978. Sher closely followed reports of their findings and immediately saw the potential of this experimental technique; in 1982 he traveled to England to learn directly from the masters.

Why would Steptoe and Edwards share their knowledge with a humble practitioner? Well, that's a story of a kindness repaid. When Sher was studying medicine in Cape Town, Dr. Steptoe visited to deliver a lecture. The eminent doctor was an avid trout fisherman, and it fell to young Sher to serve as his guide. A decade later Steptoe returned the favor, giving Sher a thorough tutorial on IVF. Sher returned to the U.S. and, before starting his chain, set up the country's first private practice that offered the new therapy.

IVF was fertility science's outer limit--and remains so for humans, even in these days of animal cloning. Step one begins with the woman taking a cocktail of drugs to increase her egg production. The eggs are then retrieved through a surgical procedure and combined with sperm in a petri dish (no test tubes nowadays). Fertilized eggs are implanted in the woman's uterus and have a chance of growing into a baby, even if she has had trouble conceiving one the old-fashioned way. (IVF is often confused with other therapies, such as treatment with Clomid, the drug responsible for the McCaughey septuplets in Iowa in 1997. IVF never results in large numbers of babies, though it does involve a significantly higher probability of twins.)

Many of the roughly six million men and women in the U.S. who have struggled with infertility are able to conceive a child through measures less invasive than IVF--say, by using a drugstore ovulation kit to improve their timing. Some will need to proceed to fertility drugs such as Clomid or artificial insemination. (The Sher Institute offers lower-impact treatments, but its specialty is IVF.) What's left is a million people at any given time who require IVF, usually because of profound fertility problems such as damaged fallopian tubes or extremely low sperm counts. But of those million, only about 60,000 undergo the procedure each year.

Why just one in 20 at any given time? IVF is a logistical migraine, requiring patients to submit to doctor's visits for tests nearly daily over the course of about a month. Often patients need to take as many as ten drugs, some by self-or spouse-administered injection. The expense ranges from $7,000 to $15,000 a cycle and is rarely covered by insurance. Success rates, even at the top clinics, are less than 50% for each cycle. "It is a physically demanding, emotionally draining, financially difficult process, and many people simply choose not to do it," says Bonny Gilbert, executive director of Resolve, a national infertility patient-advocacy group (resolve.org).

Because IVF is so taxing, Sher has made customer service the cornerstone of his practice--a revolutionary idea in the medical profession. His focus extends to such details as the color scheme of his waiting room, decorated in soft pastels, sans the pink and blue that are ubiquitous in some of his competitors' offices. The thinking here: Those colors could be a painful reminder to patients who are struggling with infertility. For the same reason, there are no baby pictures displayed in the offices. For anyone who is interested, baby photos and thank-you letters from successful patients are discreetly tucked away in photo albums.

Sher's clinics give free initial consultations because they help build the business. Sher's reasoning: Why hit up prospective patients for what amounts to chump change when they're considering procedures that can cost tens of thousands of dollars? Once a couple signs on for IVF at a Sher clinic, they see the same doctor throughout the process, rather than being passed around. They also get a cellphone number they can use to reach a nurse 24 hours a day. In a field where inaccessibility is the rule, these are major differentiators. "As a doctor today you need to have some business sense," says Sher. "The best advertisement is someone who has been satisfied with your service."

The best-known of Sher's innovations is what he calls the "outcome-based" plan. He guarantees that a couple will have a baby within three rounds of IVF, or he will refund as much as half the cost, depending on the woman's age (one of the major factors that affect conception). When he initiated this concept in 1995, he encountered criticism from both members and officials of the American Medical Association. The idea of basing a fee on outcome is anathema to most physicians. The standard argument: How does one know cancer will remain in remission? But in fertility science, as Sher points out, there is a clearly defined outcome: a baby. Because only 15% of patients have insurance coverage for IVF, the outcome-based plan has also provided a canny competitive edge. About 50 U.S. clinics have emulated Sher and started offering similar plans.

Here's how the Sher Institute's outcome-based plan works. A single round of IVF costs $7,840. But the outcome-based plan provides three tries for $14,900. If IVF works on the first cycle, the patient has obviously overpaid. If it doesn't work, the patient is eligible for a refund. Women under 30 get a 50% refund after three failed attempts; those between 35 and 38 get 25%.

Now for a bit of math: A 37-year-old woman who had three individual IVFs at $7,840 each would pay $23,520 whether or not she had a baby. For the same woman, three tries on the outcome-based plan would cost $14,900. If it didn't work, she would receive a 25% refund, bringing the total cost down to $11,175. (Because in vitro has to be customized for each patient, the fees should be viewed as a base price. Additional procedures often add $2,000 to $3,000 per cycle.) "Most practices still make money based on how often they do IVF," says Sher. "We make money when babies are born, which ties our fate to patient satisfaction. Of course, it also forces us to be much more focused and efficient."

After six years of struggling with infertility, Melissa Hoggatt, 32, and her husband, Bill, 35, were spent, emotionally and financially. The couple decided to have one last try at having a biological child. To raise $14,900 for the Sher Institute's outcome-based plan, they saved, borrowed on their credit cards, and even took out a second mortgage on their home in Slidell, La. "We knew we'd get three tries, and if it didn't work, at least we'd get some money back to pursue adoption," says Melissa.

It worked on the first try, and the Hoggatts now have twins, Tyler and Therese. Sher's outcome-based plan offers favorable odds: Roughly 80% of women under 40 have a baby within three attempts. And the Sher Institute doesn't turn away those over 40, as some practices do to pad their success rate. But it steers those women toward therapies with a greater chance of success, such as IVF with donor eggs. Sher says that at his clinics, about 90% of women over 40 who use donor eggs have babies within three tries.

(It should be mentioned here that the IVF procedure is done over a period of about a month. But the ramp-up--featuring an array of tests and medications--takes many additional weeks, as does recovery if the procedure fails. Realistically, a woman needs three months for a single round of IVF.)

Sher's success as an innovator has also undoubtedly helped his clinics' growth. Many university-affiliated IVF practices are notoriously slow to introduce new therapies and protocols. Everything has to be considered by academic peer-review boards, which move at a glacial pace. The Sher Institute, in contrast, works with private organizations such as the Western Institutional Review Board (wirb.com), based in Olympia, Wash., which runs clinical drug trials for companies such as Pfizer, Merck, and Eli Lilly. That lets the Sher Institute innovate at a private-sector pace.

For example, Sher pioneered research linking failed pregnancies to overly thin uterine linings. Years ago Sher used nitroglycerine patches as a therapy for women with that problem. But in 1999 he started recommending Viagra. That opened another chapter in the drug's twisted life: Viagra was originally designed as a heart medication, but men participating in clinical trials found that it had some interesting side effects, and then Sher discovered that it could help infertile women by increasing the blood flow to the uterus and thereby thickening the lining. Sher is the doctor behind the world's first "Viagra baby," prompting jokes from Jay Leno. Sher also receives regular potshots from fellow IVF practitioners, who say he is over-hasty and irresponsible about introducing new therapies. "If they don't agree with my practices, why are they so quick to adopt them?" says Sher, unfazed.

Sher says he makes sure patients undergoing cutting-edge procedures fill out informed-consent forms. But the best protection, he adds, is hewing to a simple rule: "We have to deliver good results." It's a kind of tribute that many of the doctors who once criticized him have adopted his innovations, from outcome-based payment plans to Viagra. "Dr. Sher enjoys playing the renegade. He is also quite successful at what he does," says Pamela Madsen, founder of the American Infertility Association (americaninfertility.org), a patient-advocacy group.

One other significant area in which Sher parts ways with most physicians is in his embrace of information technology. The Sher Institute's website features 300 pages of layman-friendly descriptions of procedures and research data, as well as discussion boards on topics like recurrent pregnancy loss and over-40 IVF. The site gets about two million hits a month. Sher and his colleagues also conduct biweekly cyber chats. About 20% of the chain's new patients come via the Net, much higher than the typical practice. The Sher Institute has cut back considerably on traditional yellow-pages advertising, redirecting that spending into its online efforts. "Our biggest marketing tool is the Internet," says Maassarani, who is both an MD and an MBA.

Sher has also sunk $1 million into a proprietary electronic record-keeping program called ReproLink. It makes it possible to crunch a huge number of variables and figure out the most promising protocol for a woman. Say there's a patient with the following profile: 39 years old, a history of miscarriages, and a blood-clotting disorder. ReproLink lets doctors locate the records of former Sher Institute patients with similar profiles to puzzle out the course of treatment that has proved most effective. The program has been invaluable in bolstering the Sher Institute's success rates, which in turn makes the clinics more profitable on the outcome-based plan.

Thanks to ReproLink, the Sher Institute is virtually free of paper patient charts. Every detail of patient care is entered into a secure computer system. That makes it possible for Sher, from his Las Vegas headquarters, to monitor patient care in the seven other locations. "My job is to oversee the other doctors in the practice," says Sher. "The beauty of electronics is that I can look over their shoulder no matter where they happen to be."

What's next for the Sher Institute? Well, remember that statistic about how only one in 20 people who need IVF ever pursue it? From where Dr. Sher sits, that looks like a massively underserved market. His goal is to keep expanding his chain of clinics. Over the next year he's planning to open new locations in Orange County and New York City. Both have lots of infertile residents, many with the means to pay for treatment. He knows he faces tough competition: Orange County has six IVF clinics, and there are some 30 IVF clinics scattered around the New York City area. But, characteristically, Sher is optimistic. "Ninety percent of doctors, no matter how good or smart they are, don't have our ability to inspire their patients," he says. He's talking about customer service. And he never forgets that he's not just a doctor but also a businessman.