Yes, ask the provider first. It may not be an actual timeout. They may just separate your child from the situation, and call it a time out. If she hits, she gets taken away from that specific scenario. I did that with my son, and it was very effective. 17 months old (in my opinion) is too young for a true timeout. 17 months is not too young for separation and deflection, though. Personally, I don't think the gentle hands bit really works until they are a bit older. I also think she is old enough to be firmly told "no." Hitting is serious, and I think it warrants a serious tone. (Again, my opinion.)
Also, I'm willing to bet your daughter CAN and DOES hurt children when she hits. It's like a little dog who bites and is not taken seriously, because they are small. Yet, if a big dog bites...that dog is bad and needs to be put down. Her size doesn't matter, hitting hurts. She should be taken away from the child she is hitting. In an effort to protect that child, and show your daughter that's not tolerated. I'm sure that's what they are doing.