The hair loss you have observed might be a result of several conditions. Notoedric mange caused by a mite, Notoedres douglasi, which is host specific to squirrels, might be one possibility. Sometimes the hair loss can be fatal due to exposure in the winter. However, full recovery of the squirrel has been observed in many cases. There are also several superficial fungal diseases that can cause hair loss. Squirrels will often develop a an immune response to these infections, recover and regrow their hair. Treatment for either condition is not practical for wild squirrels. If it is still eating well at your feeder, that may be a sign that its immune system is functioning well, and perhaps on its way to recovery. Feel free to contact me if you have additional questions.