Bailey needs surgery...

I think the surgery over draining it every few days is your best choice.  If you take him in ever few days to a vet, your vet bill will add up and he will soon be afraid to go to the vet because he associates the vets with pain.  It really would only take a few weeks to heal.  Dog heal a whole lot faster then humans and also can tolerate pain better then we can.  But if you leave it like it is he will only be in more pain then what a few weeks after the surgery would cause.
 
One suggestion I can give is try an e-collar for a while and see if it really is due to him scratching it or if it fill up on it#%92s own without him bothering it.  There has to be a reason why he scratches, and shakes his head.  Even if you get the surgery done you may find that there is something else causing the problem.  Whatever it may be if your not happy with what the vet tells you and wants to charge then find another vet.  At least if the other vet tells you the same thing then you know what is best for him.

Poor Bailey, I hope he gets to feeling better soon.

The reason I went with the surgery is because of the type of ears Witt has. My vet told me that once they get hematomas on their ears there is a high incidence of reoccurance. Also, the amount of separation of skin from cartlidge he had..the vet said that his ears would likely crinkle up quite a bit and look terrible as they healed if I did the draining. He thought it was important to make sure the skin was attched again via scar tissue. I still think I made the right choice..but I have wondered if my vets thought about it reoccuring had more to do with his assumption that Witt was going to have a life full of ear infections. He was sure this was going to be the case because he has such small ear canals. It has not been the case however,..Witt has an excellent diet and I keep good care of his ears. Talk to the new vet about options. Draining vrs. surgery and see what you think. I think it varies by dog and circumstances.
Hugs to Bailey

Oh no poor Bailey!!  It sounds really painful!  I hope these other vets can offer more/better advice and not charge as much! 
Sorry I don't have any advie - I hope he heals fast and isn't in too much pain!