BackgroundThe Chronic Dispensing Unit (CDU) is an out-sourced, public sector centralised dispensing service that has been operational in the Western Cape Province in South Africa since 2005. The CDU dispenses medicines for stable patients with chronic conditions. The aim is to reduce pharmacists’ workload, reduce patient waiting times and decongest healthcare facilities. Our objectives are to describe the intervention’s scope, illustrate its interface with the health system and describe its processes and outcomes. Secondly, to quantify the magnitude of missed appointments by enrolled patients and to describe the implications thereof in order to inform a subsequent in-depth empirical study on the underlying causes.MethodsWe adopted a case study design in order to elicit the programme theory underlying the CDU strategy. We consulted 15 senior and middle managers from the provincial Department of Health who were working closely with the intervention and the contractor using focus group discussions and key informant interviews. In addition, relevant literature, and policy and programme documents were reviewed and analysed.ResultsWe found that the CDU scope has significantly expanded over the last 10 years owing to technological advancements. As such, in early 2015, the CDU produced nearly 300,000 parcels monthly. Medicines supply, patient enrollment processes, healthcare professionals' compliance to legislation and policies, mechanisms for medicines distribution, management of non-collected medicines (emanating from patients’ missed appointments) and the array of actors involved are all central to the CDU’s functioning. Missed appointments by patients are a problem, affecting an estimated 8 %–12 % of patients each month. However, the causes have not been investigated thoroughly. Implications of missed appointments include a cost to government for services rendered by the contractor, potential losses due to expired medicines, additional workload for the contractor and healthcare facility staff and potential negative therapeutic outcomes for patients.ConclusionsThe CDU demonstrates innovation in a context of overwhelming demand for dispensing medicines for chronic conditions. However, it is not a panacea to address access-to-medicines related challenges. A multi-level assessment that is currently underway will provide more insights on how existing challenges can be addressed.Electronic supplementary materialThe online version of this article (doi:10.1186/s12913-015-1164-x) contains supplementary material, which is available to authorized users.