Sounds like a hot spot and nothing but antibiotics and steriods will clear it up. It will continue to get worse without correct treatment.
Hot spots are staph infections of the skin, due to a problem causing itchy skin. The dog digs at it, breaks the skin and staph gets into the blood stream creating a hot spot.
You need to find out why the dog has itchy skin. If you are sure there are no fleas, ticks, and you've had skin scraping done to eliminate the diagnosis of both of the skin manges, then you dog evidently either has a low immune system due to food allergies or Hypothyroidism.
Check the dog food bag. If it contains any corn, wheat, soy, by-products or chicken, find akibble that doesn't and see it that helps prevent a re-occurance . In the meantime you better get in to the vet and get this one cleared up and then you can work on finding a cause.
Here is more information about hot spots;
http://wwwdogandhorsecare.com/staph-infection